UPI: War in Iraq could cost airlines $10B

(Note: Here is an old UPI story of mine that I found online.)

Published: March. 23, 2003 at 12:52 PM
By CHRIS H. SIEROTY

WASHINGTON, March 23 (UPI) — Few industries worldwide have suffered as much as the airline sector in recent years and now the war in Iraq comes at a time when the airlines have accumulated $30 billion in losses since the Sept. 11, 2001, terrorist attacks.

The armed conflict, which is in its fourth day, could easily add $10 billion in losses to the world’s airlines by extending the current travel decline well into the summer, according to the International Air Transport Association.

“The present armed conflict will only worsen these losses,” said Giovanni Bisignani, the IATA’s director general and chief executive officer.

In a speech late Saturday to the International Civil Aviation Organization in Montreal, Bisignani said, “At this point, the air transport industry must look beyond the horizon and re-invent itself.”

In its forecast of the impact of the war on the industry, the association said it expects international passenger travel to drop 15 percent to 20 percent during the war, depending on the region of the world.

Since the terrorist attacks in the United States, major U.S. carriers have laid off 100,000 employees and lost an estimated $19 billion. Continued weakness in passenger traffic and reductions in ticket prices have resulted in bankruptcy filings by US Airways, United Airlines and Hawaiian Airlines.

A number of the nation’s major airlines have begun taking additional emergency measures in an attempt to stem further losses.

On Friday, Northwest Airlines announced plans to cut 4,900 jobs and reduce its flight schedule by 12 percent. United Airlines said it would cut its schedule by about 8 percent and lay off an undermined number of workers.

Greg Taylor, United’s senior vice president for planning, said the schedule and job cuts were due to the continuing effects on future bookings because of the military conflict in Iraq. The airline expects bookings to continue to decline as the war continues, he said.

American Airlines said it would cut international flights by 6 percent in April to meet a downturn in travel bookings due to the war in Iraq. Based in Fort Worth, Texas, the airline said it could make additional reductions if traffic remains slow.

Northwest, which also plans to idle 20 planes, has already laid off about 12,000 employees due to the slump in the airline industry. The airline said it would continue to monitor passenger demand and did not rule out further job cuts or flight reductions.

“Due to weak demand for business travel which emerged in March 2001, the subsequent impact of the terrorist attacks on the United States in September of that year, and now, armed conflict with Iraq, we have been forced to reduce our workforce by some 17,000 employee positions,” said Richard Anderson, Northwest’s chief executive officer in a statement.

The St. Paul, Minn.,-based airline said the reductions will be made through attrition, voluntary leaves, leaving open positions unfilled and layoffs.

Hawaiian Airlines, a subsidiary of Hawaiian Holdings Inc., filed for Chapter 11 bankruptcy protection Friday “to restore the company’s long-term financial health.”

No new layoffs of Hawaiian’s 3,311 employees were planned.

John W. Adams, chairman and chief executive officer of Hawaiian Airlines, said the company had made since it launched its restructuring efforts several months ago in response to the dramatically changed, operating environment since September 2001.

The airline said flight and services would continue without interruption. The parent company was not included in the bankruptcy filing.

On Wednesday, Continental Airlines announced it would reduce its workforce by 1,200 employees by the end of the year, as part of initiative to save $500 million annually.

The airline said the cut would include 125 pilots, 500 reservation agents, 350 airport agents and 225 other employees.

“We need $500 million in annual cost savings and revenue generation to permit us to be a survivor during the worst financial crisis in aviation history,” said Gordon Bethune, chairman and CEO of Continental.

Bethune cautioned that additional reductions could be announced if the war in Iraq is prolonged, or if other events further degrade revenue or increase costs.

The Business Press: Grocers back statewide ban on plastic bags

04:13 PM PDT on Wednesday, August 18, 2010

By CHRIS H. SIEROTY, Contributing Writer

At grocery store checkout stands throughout Inland Southern California, consumers have a third option to the traditional paper or plastic bags, reusable canvas shopping bags. Supermarkets from Stater Bros. to Fresh & Easy and Trader Joe’s are offering the option of purchasing reusable bags priced between 99 cents and $6.99 each.

But if a bill currently being considered in the state Senate is approved, one option — the single-use supermarket plastic bag — would be banned. The proposal seems likely to be approved after a statewide trade association announced their support, getting behind a statewide measure over a growing number of city ordinances they claim makes compliance difficult.

Based in Sacramento, the California Grocers Association recently announced its support for Assembly Bill 1998, introduced in February by Assemblywoman Julia Brownley, D-Santa Monica. The bill has already passed the Assembly and is being considered in the Senate. It was referred to the Rules Committee Aug. 12.

It also has the support of two local supermarket chains – Stater Bros. Markets and Fresh & Easy.

Jack Brown, chairman and chief executive of San Bernardino-based State Bros., said the company supported Brownley’s efforts and would follow the law if passed.

“It’s important the law affect everyone,” Brown said in an interview. Despite the bill’s environmental benefits, Brown questioned why it didn’t affect everyone, such as allowing fast-food restaurants among businesses that could still use plastic bags.

“Our customers are concerned about the environment, so we are concerned,” he said. “We live in the same communities as our customers. We will continue to (make) reusable bags available at all our markets.”

Fresh & Easy spokesman Brendan Wonnacott described the measure as “an important bill” and said the company supports it.

Brownley’s bill proposes to ban the distribution of single-use plastic bags at supermarkets and stores of more than 10,000 square feet that sell food products and include pharmacies, starting in 2012. The same law would apply to convenience food stores and food marts in 2013.

“We are taught to reduce, reuse, recycle in that order because we can’t recycle our way to a better world,” Brownley said. “This bill gets to the root of our litter problem by reducing our use of disposable bags.”

She argued that a statewide ban would persuade shoppers to switch to reusable bags and save the state almost $25 million a year it spends on cleaning up plastic bag litter. Californians discard about 19 billion plastic bags annually, according to the bill’s analysis report.

While the California Grocers Association has opposed similar bills, it has supported Brownley’s latest legislative efforts.

“The bill creates a uniform, statewide standard to help level the playing field among food retailers,” said California Grocers Association President Ronald Fong, in a statement. “It addresses the issue of single-use carryout bags across all California jurisdictions and provides the most environmental gain with the least competitive disruption for retailers.”

Fong said changing consumer behavior will be challenging, but believes Californians will embrace the change.

If the law is passed affected stores would be required to eliminate the use of plastic bags and to make reusable bags available to customers at checkout stands. The stores could also sell single-use bags made of recycled paper for a cost of at least 5 cents if the bag contains at least 40 percent biodegradable content.

Brown said Stater Bros. has been active over the last three years in promoting the use of reusable bags at its 167 stores. The canvas bags at Stater Bros. sell for 99 cents.

Stater Bros. also features collection bins at each store for customers to recycle plastic bags and wrapping, he said.

“We sold over 300,000 canvas bags in 2009,” Brown said. “Last year, we recycled 2.9 million pounds of plastic bags. The paper bags we use are made with 100 percent recycled materials.”

At Trader Joe’s, prices range from 99 cents for a standard canvas bag to $6.99 for a blue, eight-gallon insulated reusable bag. The chain, which operates 10 stores in Riverside and San Bernardino counties, uses brown paper bags that are made from 40 percent recycled materials and has a nationwide program that offers incentives from drawings for products or gift certificates to customers that use their own bags.

Janet Little, a spokeswoman for San Diego-based Henry’s Farmers Market, said more and more of their customers are using reusable bags. “In my opinion, one out of three customers brings in their own reusable bag when shopping,” she said. The company offers five-cent discounts per bag to customers who bring their own.

While reusable shopping bags have become a popular item, many consumers use them over and over again without a thought about the health consequences of using dirty bags. A recent study by Loma Linda University and the University of Arizona found reusable grocery bags can be a breeding ground for dangerous food-borne bacteria and pose a serious risk to public health.

“If this is the direction California wants to go, our policymakers should be prepared to address the ramifications for public health,” said co-author Ryan Sinclair, a professor at Loma Linda University’s School of Public Health, in a statement.

The report noted that “a sudden or significant increase in use of reusable bags without a major public education campaign on how to reduce cross contamination would create the risk of significant adverse public health impact.”

Press-Enterprise: CVB shares fall on news of SEC subpoena

11:56 AM PDT on Wednesday, August 11, 2010

By CHRIS H. SIEROTY
Special to The Press-Enterprise

CVB Financial Corp. shares lost 22.3 percent of their value Tuesday after the parent company of Citizens Business Bank said it received a subpoena from the Securities and Exchange Commission, seeking information about how the company handles troubled loans.

CVB Financial received the subpoena from the Los Angeles office of the SEC on July 26, according to a quarterly 10-Q filing by the Ontario-based bank late Monday.

“I can’t really comment beyond what was in our filing,” said Christopher D. Myers, president and chief executive officer of CVB Financial. “I have full confidence that we will go through this investigation and our management practices will prevail.”

The subpoena requests information about the bank’s loan underwriting guidelines, its allowance for credit losses and the way it calculates its allowance for loan losses, according to the quarterly filing. The federal regulator also wants to know about CVB’s methodology for grading loans and how it makes provisions for loan losses.

CVB shares declined $2.30, or 22.3 percent, to close Tuesday at $8 per share on the Nasdaq stock market. By the end of trading Tuesday, more than 13.17 million shares had changed hands, well beyond the stock’s average daily activity of 851,848 shares, according to Nasdaq.

The subpoena was issued five days after CVB announced record earnings of $19 million, or 18 cents per share in the second quarter, compared to income of $15.9 million, or 17 cents per share, for the same period last year. For the second quarter, CVB set aside an $11 million provision for credit losses, the bank said.

Overall, the allowance for credit losses increased from $108.9 million as of Dec. 31, 2009, to $118.5 million as of June 30, 2010. The increase was primarily due to a provision for credit losses of $23.2 million during the first six months of 2010, offset by net loan charge-offs of $13.6 million.

The subpoena also requests information about presentations CVB has given or conferences the bank has attended with analysts, brokers, investors or prospective investors.

“We do not know the events that caused the SEC to request information on these subjects, and the SEC does not make this information known,” CVB said in the filing. However, the subpoena stated the investigation does not mean the SEC has concluded “that you or anyone else has broken the law.”

“CVB is fully complying with the SEC’s requests, and we look forward to a speedy resolution,” the company said.

In a research report issued Tuesday, Cantor Fitzgerald analyst Michael Diana attributed the SEC’s investigation to allegations by short sellers “that CVB Financial is in effect a fraud,” but to date “have been frustrated in their attempts to convince others.”

On May 10, federal regulators completed their annual examination of CVB Financial, “which judging by the Q2 results was a ‘clean’ exam.”

“Our view of the SEC subpoena … is that the shorts may have written the SEC a letter that was so inflammatory that, especially in the current regulatory environment, the SEC decided that is had no choice but to pursue an investigation,” Diana wrote.

“We believe that there is a high probability that the SEC investigation will have the same positive outcome as the examination recently completed by bank regulators.”

Diana also reiterated his firm’s buy rating on CVB shares, with a $13 target price based on their 2011 earnings per share estimate of 91 cents.

“CVB Financial runs a pretty conservative operation,” said Michael R. Natzic, senior vice president with Stone & Youngberg’s Community Bank Group in Big Bear Lake. “I don’t really have any major concerns at the moment. Like everyone else, I’m waiting for more news.”

The Business Press: Waterside inks big lease deals

Defense agency, University of Phoenix agree to leases totaling $10.2 million

06:00 AM PDT on Tuesday, July 27, 2010

By CHRIS H. SIEROTY
Contributing Writer

Two lease deals totaling more than 60,000 square feet and valued at $10.2 million have been inked at University Plaza at Waterside Centers in Ontario, the The Hileman Company LLC, who owns the property in a joint venture with Pacific Coast Capital Partners, announced Monday.

Jack Hileman, founder and president of the Beverly Hills-based real estate management and investment services firm, said in the larger of the two deals, The University of Phoenix signed a 5 ¬Ĺ-year lease extension that will keep the Ontario Learning Center in 50,000 square feet of space through 2017. The lease extension is valued at approximately $7.6 million, he said.

The University of Phoenix’s Ontario Learning Center was one of the original tenants of the five-story, 100,000-square-foot building at 3110 E. Guasti Road, which was built in 2004.

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Special To The Business Press
University Plaza is part of a 16-acre master-planned Class-A office campus in Ontario’s Centrelake development off of Interstate 10.

In the second transaction, Defense Contract Management Agency, or DCMA, has signed a 10-year lease for 11,500 square feet to house the Ontario office of its Aeronautical Systems Division in a deal valued at approximately $2.6 million.

The DCMA is a division of the U.S. Department of Defense that works with the department’s suppliers to ensure that supplies and services are delivered.

The DCMA has 9,000 civilian employees and 562 military personnel in 42 offices throughout the United States with active contracts worth more than $1 trillion, according to the agency’s website.

“The new lease with the (DCMA) took nine months to negotiate, and the renewal with University of Phoenix took about the same,” Hileman said. “In one instance, we were dealing with a government agency who typically moves at their own speed in any market, and in the other instance, we had a tenant who still had ample time remaining on their existing lease yet wanted to take advantage of today’s tenant-favorable leasing market.”

Hileman said the transactions raise the lease rate at University Plaza to 75 percent, which is part of a 16-acre master planned Class-A office campus.

The new leases were announced about eight months after the company announced that Community Bank of Pasadena had signed a six-year lease to occupy 7,400 square feet at the University Plaza building. The Community Bank lease was valued at $1 million.

“Both (of these new deals) are significant leases with quality tenants so combined they secure a stream of stable cash flow to the project on a long term basis,” he said.

Besides University Plaza, the upscale complex includes Waterside I and Waterside II. Currently Waterside I is 85 percent leased, while the six-story Waterside II, the center’s newest building, remains a 100 percent vacant, he said.

Moving forward, Hileman said his firm and their co-owner, Pacific Coast Capital Partners, continue to focus their efforts “on securing a major tenant who will occupy a large amount of space for the newest building at Waterside Center.”

“For the other two buildings, which are now significantly leased, we remain focused on smaller tenants to infill the remaining spaces we have available,” he said.

The company and Pacific Coast Capital Partners acquired the office complex in April 2007 for $53 million from The Trenton Group.

The Business Press: Storm owner buys Las Vegas team

MINOR LEAGUES: Jacobs adds hockey team to go along with his minor league baseball team in Lake Elsinore.

06:00 AM PDT on Thursday, July 29, 2010

By CHRIS H. SIEROTY
Contributing Writer

Gary Jacobs, who has been managing owner of the Lake Elsinore Storm since 2001, has purchased the Las Vegas Wranglers, a franchise in the East Coast Hockey League.

Jacobs purchased the team for an undisclosed amount from Jonathan Fleisig, who owns the ECHL’s Bakersfield Condors franchise.

“I have always enjoyed minor league sports because of the interaction with the fans and its affordability,” said Jacobs. “Furthering the team’s presence in the Las Vegas community will be a top priority. We are here to serve our sponsors, fans and the community.”

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Frank Bellino / Contributing Photographer
Gary Jacobs is managing director of Jacobs Investment, which participates in development, private and public equity and venture funds.

In a phone interview, Jacobs said just like his purchase of the Storm, it all began with a phone call to gauge his interest. After the initial pitch, Jacobs explained that it looked “like a team that was undervalued” and he was confident he could “do something with it.”

While he declined to discuss financial details of operating a minor league hockey team, he said he was confident that by reducing ticket prices and implementing a new operating budget, the Wranglers would break even in the upcoming 2010-2011 season. Jacobs said the goal was to create an affordable entertainment option for residents in Las Vegas.

“No one was immune to the recent economic downturn, but the team has a tremendous reputation in Las Vegas and continued to draw fans last season,” he said. “In our local market, despite the recession, Storm attendance is up this season.”

For 36 home games last season, the Wranglers drew 156,591 fans, for an average of 4,350 per-game. So far this season, the Storm, a Class-A affiliate of the San Diego Padres, leads the California League in attendance drawing 145,826 fans for 43 games, an average of 3,391 per-game.

“Las Vegas is an important market for our league, especially to the teams here out West, so the news of a strong ownership group coming in that is savvy in sports marketing is huge,” said Justin Kemp, president of the Ontario Reign. “Having owners like this in our league in key markets is a strong step forward in the overall strength of the ECHL. I would expect to see good things come out of Las Vegas heading into the 2010-11 campaign and beyond.”

When asked about the possibility of moving the franchise closer to home in San Diego, Jacobs laughed, adding “never say never, but the plan is to keep the Wranglers in Las Vegas.”

Based in Del Mar, Jacobs is managing director of Jacobs Investment Co. LLC, a real estate investment firm that he founded in 1997. He is a son of Irwin Jacobs, the chief executive officer of Qualcomm Inc. Gary Jacobs at one time was an executive at Qualcomm.

Jacobs told The Business Press that the plan was to “stabilize” the franchise in Las Vegas and continue its relationship with the Orleans Arena.

“We look to take the greatest hits from our success with Storm baseball and combine it with the things that the Wranglers do very well,” he said. “It’s exciting and I know our fun in doing it will be contagious.”

At Storm games this season, the team is offering a number of promotions including free chicken tacos on Thursday and a family fun pack for $8 that includes four box seats, four hot dogs, four small sodas and two tickets to the stadium arcade. Jacobs said both teams will market their product at the other’s stadiums in an effort to create a “market synergy” between Lake Elsinore and Las Vegas.