LaGuardia Airport is the smallest of the three major airports in the New York area, with just two main runways. Planes often sit in long lines on the tarmac, waiting their turn to take off.
So why would Southwest Airlines, a carrier that boasts about its on-time prowess, want to go there? In many ways, because it has to.
Southwest prospered by offering low fares to leisure travelers whose only other affordable option was a car trip. It flew primarily to America’s secondary airports where costs are low and productivity is high because incoming planes can land, drop off passengers, take on the next group and get back in the air quickly.
Today, Southwest starts service at LaGuardia, one of the nation’s most congested airports. This should bring cheaper ticket prices to New York area vacationers flying to Chicago, Baltimore and beyond. But the move is also part of a risky transition to win the loyalty of business travelers who increasingly will dictate Southwest’s future prospects for success.
Southwest started flying in 1971 with three planes. Herb Kelleher, the garrulous, chain-smoking co-founder, fought in court and in the air against bigger airlines that tried to run him out of business.
Southwest didn’t offer the amenities found on other airlines, but it outlived early rivals by sticking to a core philosophy: Give people low fares and great service.
The Dallas-based carrier still sees itself as an underdog today, even as it serves 65 cities, including St. Louis, and carries more than 100 million U.S. passengers per year, more than any other airline.
There are still no first-class cabins and no assigned seats on Southwest, giving it the air of a carrier for penny-pinching vacationers.
"We’re very dependent on business travelers, so we’re not a leisure airline like some of our smaller competitors are," CEO Gary C. Kelly countered in an interview. He says company surveys show that in normal times at least 40 percent of his customers are traveling on business.
Airlines covet business travelers because they make repeat trips and often pay higher fares for booking at the last minute free car insurance quotes.
Southwest needs that revenue now. The airline has been profitable for 36 straight years but has been in the red since last fall. Traffic is down and costs are rising.
While it’s cutting flights across its system, Southwest is also entering New York and three other big cities, including Boston’s Logan Airport.
Kelly has been fine-tuning the Southwest model since becoming CEO in 2004. In pursuit of business travelers, he bent the traditional "first come, first serve" seating rules with "Business Select." Passengers pay a few bucks more to get a spot at the front of the boarding line, an extra frequent-flier award and a free drink. He also pushed Southwest into the kind of huge airports it once spurned, such as Denver and Philadelphia.
Now it needs the big Eastern cities to buttress its service at Chicago’s Midway Airport, Southwest’s second-busiest hub, with more than 200 daily flights.
Despite the notorious delays in New York, Southwest officials believe they can turn around incoming planes in 30 minutes, close to its nationwide average. That’s important because Southwest keeps costs down by getting the most use out of its planes — on average, they make six flights and spend 12 hours in the air each day.
The New York-Chicago route pits Southwest against long-standing rivals American and United, which have many more daily flights between the two cities.
Southwest officials brag about forcing competitors to cut fares. In 1993, government analysts called this phenomenon "The Southwest Effect." Fare experts say Southwest still strongly influences ticket prices in markets it enters.
Rick Seaney, chief executive of FareCompare.com, studied fares in Denver before and after Southwest returned to the market in January 2006. He said United, then the dominant carrier there, cut its average cheapest round-trip fare out of Denver by one-third in the first year after Southwest said it would serve the same airport.
Jose Castro had several needs when he began looking for a second career in 2006. After spending about 20 years selling insurance, often in small towns around Missouri, Castro tired of traditional 9-to-5 hours and the exhausting, long car trips. He also wanted a job he could share with his companion, Mary Deacon, and one with a relatively low start-up cost.
That’s the short version of how an agricultural adviser from Peru eventually wound up running a crepes restaurant in downtown St. Louis.
Castro modeled the restaurant after his favorite spots in Peru. The restaurant features long tables to encourage strangers to interact, as well as a large mural and other art — all designed to create a welcoming, international feel. Castro also talks proudly about how servers in Peru are more like performers. He tries to bring a similar sense of showmanship to the restaurant, from the way he brings water to a table to how the crepes are prepared in plain view of customers.
Most of the restaurant’s food, of course, is not Peruvian. But Castro said he quickly learned while selling insurance how expressive American consumers are when it comes to embracing or rejecting products.
Castro said it’s one of the things he likes best about America. It’s also why he was confident about opening a new restaurant in the midst of an economic downturn.
So when you started looking to get out of selling insurance, how did you eventually decide on a crepe restaurant?
You don’t need a big investment to do the crepes. You just need the little (electric griddle). … If you want to do burgers, yeah you need a grill, but now you need a (range) hood. And that can be very expensive. … You just plug (the grill) in and it can go anywhere.
Also, the fact that there are not too many places doing crepes in the area. We thought we can just combine so many flavors here. That’s the other part, every culture has some kind of food you put in a wrap. You call it a tortilla, you call it wrap. And this is the crepe. You can put whatever inside … and most people like it.
How has starting this business gone?
We started the business in a most difficult time. (Previously, he ran his crepe business out of the office services and coffee bar Washington Ave. Post). I mean, we started in October and two weeks later President Bush announced that we’re in a recession. So all that bad news was mounting. When the loan was approved, we had to think hard about if we were going to take it, because who wants to open in a terrible time?
I felt I had no choice. … If you’re pushing hard and that’s all you know how to do at that point, to back up after all this time — to do what? It’s not me, you know? I was so involved with it and it was my dream, that I felt, if I do this, people are going to come. If we present something nice and different, people are going to come.
What drew you to St. Louis from Peru?
I was about to get married (to a St no fax payday loans. Louis native) at the time, and we made the choice to (live in) Peru. But in between, terrorism started and it was of the worst kind. Very, very violent. …
I was an agricultural adviser. I worked for a large farming company and also I researched land pollution from mining companies. So I had to be on those lonely roads all the time. And it was like, can’t do that anymore. People with machine guns were attacking. I didn’t want to be in my own car and have them take it or who knows what — ransom or kidnap me or whatever.
At that time, it was not that bad, but I had to make a decision, I had to look into the future and ask, "Are things going to get better?" My assessment was it would not, and I was right. I only knew that later. It got really bad, not only on those lonely roads, but in Lima (the capital). It would’ve been easier for me to adapt to this situation (in America) than for her to adapt to that situation.
So you see yourself and your servers as performers?
Oh, they are. They’ve got to be. … Every time there is an exchange — it could be that they dropped a fork and you bring another one — don’t just put it there. Make that connection. Allow for appreciation. See if (the customer) likes that. It’s part of the experience. You’re doing your job when you allow for that person to say, "Thank you."
When you put a plate down, you’re always looking at the person. It’s always that eye contact. We all are in a show. It’s got to be a show.
Any of my employees can tell you I say, "Have you ever seen or heard that Mickey Mouse was in a bad mood? Do you think it would be all right if Cinderella was angry that day? Probably not. So why here? What’s the difference? People don’t care about your personal problems." That’s one thing I learned by practicing and working at Lucas Park Grille.
How have you enjoyed performing everyday?
I liked it. One of the owners at Lucas Park Grille told me once because of the good comments from the clientele, "You’re one of the features here."
For me, maybe it was natural. I’ve got to be that way. The excellence of service I was getting in Peru, it goes well in that environment, but it’s much more formal. Here, people want to engage with you. In the very first week here in the United States, one of the things that came to my attention was people would be talking in the line at the grocery, and they would be engaging the cashier.
In Peru, its strictly formal. I’m the employee and you’re the client and show a lot of respect and formality. But the thing about social or economic class is not brought up all the time. Here, you don’t know with whom you’re talking.
New orders for long-lasting U.S. manufactured goods rose by a much stronger-than-expected 1.8% in May, Commerce Department data showed Wednesday, providing further evidence that the battered U.S. economy was finding its feet.
Analysts polled by Reuters had forecast durable goods orders would decline 0.6% last month. May’s increase, the third gain in 4 months, followed a revised 1.8% gain in April, previously reported as a 1.7% rise.
New orders excluding transportation advanced 1.1% last month, compared with a forecast for a 0.4% decline, buoyed in part by a 7.7% rise in new machinery orders. This was the largest percentage increase in that category since March 2008, the Commerce Department said.
Orders excluding defense were 1.4% higher, versus a Reuters’ poll prediction for a 0.4% drop.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, jumped 4 payday loan.8% in May, the largest gain since September 2004, when they were up 8.2%. May’s sharp rise compared with analyst forecasts for a 0.6% drop, and followed a revised 2.9% fall in April.
In one area of particular weakness, orders for motor vehicles and parts dropped 8.1% in May, the sharpest fall since August.
The Commerce Department said shipments of durable goods fell 2.1% in May, after falling 0.5% the month before.
This was the 10th straight decline in shipments, and the longest streak of consecutive monthly decreases since records began in 1992, the Commerce Department said.
The Federal Reserve will emphasize that the U.S. economy remains fragile in a policy statement later on Wednesday, as it talks down expectations for a rate hike this year and holds fire on expanding asset purchases.
The statement is due after 2:15 p.m. EDT at the conclusion of a regular two-day policy meeting.
Analysts widely expect that the U.S. central bank will hold the benchmark overnight federal funds rate between zero and 0.25 percent, while emphasizing it will remain in this range for some time.
“With ‘core’ inflation beginning to moderate again, and legitimate threats to recovery still in evidence, officials have scant reason to turn hawkish,” Morgan Stanley economist Richard Berner wrote in a note to clients.
U.S. core inflation, which excludes volatile food and energy costs, slowed to 1.8 percent year-on-year in May compared with 1.9 percent in April.
Fed officials have indicated that they would like to keep inflation close to, but under, 2 percent.
In addition, the U.S. economy is widely expected to have contracted further in the second quarter, albeit at a sharply slower rate of decline than the 5.7 percent annualized drop seen in the first three months of the year.
But some recent economic data has been better than expected, helping to harden speculation in futures markets that the Fed would hike rates to 0.5 percent by the end of the year, although these bets have eased in the past week.
The Fed is expected to push back against the idea of a rate hike this year in the statement it will issue at the meeting’s end california health insurance. Economists are focused on how the central bank’s language could be tweaked to accomplish this tricky communication.
Economists at Goldman Sachs said one option would be for the Fed to say something along the lines of “conditions are likely to warrant a federal funds rate in the current range for an extended period,” ruling out modest hikes to 1 percent.
At the Fed’s last meeting on April 28-29, it said “conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”
The Goldman economists said their suggestion would offer a clearer signal.
Either way, officials may be wary of offering too explicit a commitment. In 2003-04, they vowed to hold rates low for a “considerable period,” and kept rates at a 1 percent for a year — a stretch which many economists say helped inflate the housing bubble.
“We’re not calling for an exact repeat of the ‘considerable period’ … but we wouldn’t be surprised to see the Fed use a similar phrase that becomes part of the financial lexicon for the balance of 2009 and the first half of 2010,” said Michael Darda, chief economist at MKM Partners.
The Fed is not expected to ramp up asset purchases above an existing promise to buy $300 billion of longer-dated U.S. government bonds and $1.45 trillion of mortgage debt, although it might make some minor changes.
Two federal agencies warned consumers Friday not to eat raw Nestle Toll House refrigerated cookie dough.
The company said it is recalling an estimated 300,000 cases of the dough as a precaution after reports of food-borne illness in 28 states.
There are concerns that the pre-made dough may be contaminated with the bacterium E. coli 0157:H7, which causes abdominal cramping, vomiting and diarrhea, the Food and Drug Administration and the Centers for Disease Control and Prevention said. Young children and the elderly can suffer more serious symptoms.
Nestle issued a statement saying, "While the E. coli strain implicated in this investigation has not been detected in our product, the health and safety of our consumers is paramount, so we are initiating this voluntary recall."
According to Nestle spokeswoman Laurie MacDonald, raw dough was one of the things the sick people reported eating.
"The health and safety of our consumers is our number one priority," she said. "We felt the best thing to do is a voluntary recall."
She said the company was informed by the FDA Wednesday night "and immediately took action cashadvance."
"We really want to remind consumers that raw cookie dough should not be eaten," she added.
Since March, the CDC says, 66 people have become sick in 28 states after eating raw cookie dough. Twenty-five people were hospitalized. No one has died.
The FDA and the CDC say people who have become sick after eating refrigerated Toll House cookie dough should contact their doctors.
They advise consumers to throw out all prepackaged, refrigerated Nestle Toll House cookie dough products. Retailers and restauranteurs should not sell or serve the any Toll House cookie dough products, the agencies said.
The company said the market share for Nestle Toll House refrigerated cookie dough for the most recent 52-week period was 41%.
The recall does not include already-baked Toll House cookies, varieties of Toll House morsels, chocolate baking bars or cocoa or Dreyer’s and Edy’s ice cream products with Nestle (NSRGY) Toll House cookie dough ingredients.
U.S. billionaire Len Blavatnik is planning to file a lawsuit against JPMorgan Chase on Monday, accusing the bank of mismanaging an investment account that held $1 billion in assets owned by Blavatnik’s industrial holding company, Access Industries, the New York Times said.
In the proposed lawsuit, Blavatnik’s lawyers blame Ted Ufferfilge, a JPMorgan banker advising Access, for losing $98 million of the company’s money betting on risky subprime mortgage securities, according to the paper.
The proposed lawsuit contends that Ufferfilge told Access that its funds were being invested in conservative instruments, not securities that wound up at the center of the American mortgage crisis, the paper said, citing a draft of the complaint prepared by the law firm Quinn Emanuel Urquhart Oliver & Hedges.
An Access spokesman told the paper that JPMorgan bought the subprime securities for Access “at a time when the bank itself was unwinding its positions in similar investments business cards online.”
JPMorgan intends “to defend this matter vigorously,” a spokeswoman for the bank told the paper. “We believe this lawsuit is meritless and a transparent attempt to recover losses resulting from the unprecedented market downturn,” she told the paper.
The bank has hired the law firm Paul, Weiss, Rifkind, Wharton & Garrison to represent it in the case, the paper added. JPMorgan and Access Industries could not be immediately reached for comment by Reuters.
(Reporting by Chakradhar Adusumilli in Bangalore; Editing by Muralikumar Anantharaman)
China could still increase its holdings of U.S. Treasuries if the dollar is stable, even though the long-term trajectory is to diversify its foreign exchange reserves, a former central bank governor said in an essay.
A number of senior Chinese officials have voiced concern recently about Beijing’s exposure to U.S. debt, given what they see as a mounting medium-term risk of inflation in the United States.
About 70 percent of China’s $1.95 trillion in official foreign exchange reserves is held in dollar assets.
The article by Dai Xianglong, former head of the People’s Bank of China (PBOC) and currently chairman of China’s National Social Security Fund (NSSF), echoed similar comments he made last week that Beijing has little choice but to keep buying U.S. debt.
“It is still possible for China to increase its investment in U.S. treasuries at appropriate times,” Dai wrote in the article, published in the latest issue of China Finance magazine, which is backed by the PBOC guaranteed approval payday loans no teletrack.
But Dai said that it was not correct to “simply describe the current situation of China’s foreign-exchange reserve management as one of falling into a ‘dollar trap.’”
The World Bank said on Thursday that the pace at which China accumulates forex reserves will slow dramatically.
The bank expects they will rise by $218 billion this year after increasing by $419 billion in 2008 and $462 billion in 2007, as outward foreign direct investment increases and due to losses on foreign assets, repatriation of profits and “hot money” outflows.
Dai was governor of the PBOC from 1998 to 2002. The NSSF that he now heads is a fund of last resort for China’s patchwork of underfunded provincial pensions schemes.
(Reporting by Jason Subler and Zhou Xin; Editing by Ken Wills)
China could still increase its holdings of U.S. Treasuries if the dollar is stable, even though the long-term trajectory is to diversify its foreign exchange reserves, a former central bank governor said in an essay.
A number of senior Chinese officials have voiced concern recently about Beijing’s exposure to U.S. debt, given what they see as a mounting medium-term risk of inflation in the United States.
About 70 percent of China’s $1.95 trillion in official foreign exchange reserves is held in dollar assets.
The article by Dai Xianglong, former head of the People’s Bank of China (PBOC) and currently chairman of China’s National Social Security Fund (NSSF), echoed similar comments he made last week that Beijing has little choice but to keep buying U.S. debt.
“It is still possible for China to increase its investment in U.S. treasuries at appropriate times,” Dai wrote in the article, published in the latest issue of China Finance magazine, which is backed by the PBOC fast payday loan no faxing.
But Dai said that it was not correct to “simply describe the current situation of China’s foreign-exchange reserve management as one of falling into a ‘dollar trap.’”
The World Bank said on Thursday that the pace at which China accumulates forex reserves will slow dramatically.
The bank expects they will rise by $218 billion this year after increasing by $419 billion in 2008 and $462 billion in 2007, as outward foreign direct investment increases and due to losses on foreign assets, repatriation of profits and “hot money” outflows.
Dai was governor of the PBOC from 1998 to 2002. The NSSF that he now heads is a fund of last resort for China’s patchwork of underfunded provincial pensions schemes.
(Reporting by Jason Subler and Zhou Xin; Editing by Ken Wills)
CALGARY–TransCanada Corp. shares fell six per cent in Wednesday trading on the TSX after the company announced a $1.6 billion financing and said it will acquire full control of the Keystone Pipeline System, a major oil delivery project.
TransCanada shares fell $1.99 to $31.07 on the Toronto Stock Exchange, as investors worried about the share dilution effects of its financing, which will be used in part to pay for the Keystone buyback.
Late Tuesday, the Calgary company said it will pay US$500 million and assume US$200 million of short-term debt to buy out its partner, U.S. oil giant ConocoPhillips (NYSE: COP).
The deal, which is slated to close in the third quarter, means TransCanada will be forced to spend $1.7 billion more on building the pipeline through 2012.
"This acquisition represents a unique opportunity for TransCanada to become the exclusive owner of an important oil transmission system that will play a vital role in transporting a growing supply of Canadian crude oil to the largest refining markets in the United States for decades to come," said Hal Kvisle, TransCanada president and chief executive.
"We believe the significant commercial support Keystone has received to date highlights the value it will create for our customers and our shareholders."
The deal follows TransCanada's acquisition of a 29.9 per cent stake in Keystone from ConocoPhillips last year, which left the U.S. company with a 20.1 per cent stake.
It originally owned 50 per cent of Keystone, but has been lowering its stake to use its cash for other oil and gas projects.
When completed, Keystone will be one of the largest oil delivery systems in North America with the capacity to ship 1 credit scores.1 million barrels a day of oilsands crude from Northern Alberta to refineries in the United States.
Keystone has secured long-term commitments for 910,000 barrels per day for an average term of approximately 18 years which represents 83 per cent of the commercial design of the system.
In the financing, the country's largest natural gas shipper said a syndicate of underwriters led by RBC Capital Markets, BMO Capital Markets and TD Securities has agreed to purchase the shares for $31.50 per share.
The underwriters also have the option to purchase as many as 7.62 million additional common shares at the same price for potential proceeds of another $240 million.
TransCanada currently has about 620 million shares outstanding.
The US$12-billion Keystone pipeline will eventually ship oil from Alberta to the lucrative U.S. Gulf Coast market, where refineries are able to handle heavy oilsands feedstock.
Calgary-based TransCanada is involved in several major new projects to expand its transmission system, including the Keystone oil pipeline, the North Central Corridor expansion and three large-scale, gas-fired power plants that will be completed and placed into service over the next four years.
It also recently won a contract to build, own and operate a US$320-million pipeline that will run from a liquefied natural gas terminal on Mexico's Pacific coast to the city of Guadalajara, and it will collaborate with ExxonMobil Corp. (NYSE: XOM) on a US$26-billion natural gas pipeline in Alaska.
Prosecutors in the case against Bernard Madoff on Monday submitted 113 victim statements to the New York judge that will preside over the disgraced financier’s sentencing.
The statements were emotional, blaming Madoff for ruining lives and wiping out entire life-savings.
Madoff, 70, who masterminded the biggest Ponzi scheme in history, is due to be sentenced June 29. The statements were addressed to to Judge Denny Chin of the Southern District of New York.
Madoff has been held in the Metropolitan Correctional Center in lower Manhattan since March, when he pleaded guilty to 11 criminal counts, including fraud, money laundering and perjury. He faces a potential 150-year sentence in federal prison.
"At the age of 89, I find myself and my wife (86) devoid of future hope," said one victim. "I find it hard to believe what he did to us and…all the charities affected by this Bastard."
Another victim said she and her husband had their entire life savings invested with Madoff.
"I often feel as if life is futile," the victim, who said she was a mother of three, said in a statement default payday loan. "Why bother to do ‘the right thing’ when it doesn’t mean anything?"
Eight of the victims requested to speak at the sentencing later this month, including one, who said she had known Madoff personally for 20 years.
"My family and I have lost everything," she wrote.
Thousands of investors were victimized by Madoff’s massive, long-running scheme, with losses in the billions of dollars. Investigators are still tallying up the number of victims and the amount of the money that was stolen.
Investigators are also seizing and itemizing Madoff’s assets - including those belonging to his wife Ruth - for liquidation. The assets will be used to pay back burned investors.
Attorneys for Madoff could not immediately be reached for comment.
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