U.S. Economic/Financial News
Delta, Other Airlines Announce Huge 2004 Losses, Despite Vicious Austerity
The Jan. 19-20 announcements of 2004 earnings for four "legacy" airlines show huge losses for Delta. Draconian reductions in workforce, wages, and pensions by Delta and others in the last year, have been outpaced several times over by collapsing ticket prices, and fuel costs that are 67-75% higher than in 2003.
Delta reported a 2004 net loss of $5.2 billion, versus a $773-million loss in 2003. Even without extraordinary items, like the write-off of goodwill of its regional carrier, Comair (which cancelled 1,100 flights on Christmas Day), Delta's loss for the year would have been $2.3 billion, or three times its 2003 loss.
During 2004, Delta: cut executive pay by 10% across the board; eliminated health benefits to employees who retire after Jan. 1, 2006; announced the elimination of 6,000-7,000 jobs by December 2005; announced plans to eliminate the Dallas-Ft. Worth hub; reduced pilots' base pay by 34.5% as of December; and stopped accruals to its defined-benefit pension plans in December, establishing a less valuable defined-contribution plan as of Jan. 1, 2005, among other cutbacksand still lost $5.2 billion in 2004!
American, the world's largest airline, lost $761 million in 2004, compared to $1.2 billion in 2003, but American's fourth-quarter loss is more than three times its fourth-quarter loss in 2003; the airline said higher fuel prices cost it $1.1 billion in 2004. The carrier plans to eliminate 3,200 jobs in 2005.
Continental's net loss for 2004 was $363 million, against net income of $38 million in 2003. Continental cut $900 million in costs in 2004.
Northwest reported an $878-million loss for 2004, versus a net income of $236 million for 2003, despite its announcement of progress in 2004 in cutting salaried workers' and pilots' benefit and wage costs.
United Airlines and U.S. Airways are already in bankruptcy, and have not yet reported.
U.S. Wages Continue To Fall, Despite Longer Hours Worked
Average hourly wages fell from 2003 to 2004, as did weekly wages, although workers put in more hours. These are the trends, when the figures are adjusted for inflation, announced Jan. 19 in the Bureau of Labor Statistics' Real Earnings report. From December 2003 to December 2004, U.S. average weekly earnings (approx. $537 unadjusted), after deflation for the Consumer Price Index, decreased by 0.2%. Average hourly earnings over the same period declined 0.4% after inflation-adjustment. "That decline in real (inflation-adjusted) wages is the first in more than a decade, and the largest decline since 1992. A modest increase in the length of the work week was not enough to keep real average weekly earnings from falling as well," said Sen. Jack Reed (D-R.I.), in a press release. Reed serves Joint Economic Committee, which was established by the Employment Act of 1946, to review economic conditions and policy. The release adds, "Since job losses peaked in August 2003, average hourly earnings have declined by 0.6%, once inflation is taken into account [emphasis in original]. Corporate profits, by contrast, have grown by 41% under President Bush."
Michigan Continues To Shed Manufacturing Jobs
Michigan lost another 15,000 jobs in December alone, pushing the former industrial state's official unemployment rate to 7.3%the highest level in a year. Losses were concentrated in retail, education, and health services, according to figures released by the state's Department of Labor & Economic Growth. But the grim picture is even worse, as the statistics include a "gain" of 4,000 manufacturing jobs due to workers recalled from short-term layoffs. Over the past five years, the manufacturing industry in Michigan has been decimated under free trade and outsourcing, losing a staggering 210,000 jobs23% of the manufacturing workforce.
An economist, cited by the Detroit News Jan. 2, warned, "We have a serious systemic problem in the state of Michigan. We can't just blame the manufacturing industry, or the automakers."
California Educators Declare War on the Terminator
A coalition of the state's largest education groups, facing the loss of another $2 billion from the amount to which they are entitled under a voter-approved funding guarantee, are meeting to map out a strategy for attacking Gov. Arnold Schwarzenegger over his proposed budget cuts, the Napa News reported Jan. 18. Beast-man Arnie not only wants to steal more money from schools next year, but has also proposed a cap on future state spending.
"We're ready for an all-out battle, absolutely," pledged Bob Wells, executive director of the Association of California School Administrators, adding, "We can't afford to be intimidated."
Last year, educators caved in to the Governator's demand to accept $2 billion less than they were supposed to get, with Schwarzenegger promising to restore the lost funds and not make any more cuts.
The education coalition is launching a three-pronged attack: mounting a media campaign aimed at voters; mobilizing legislators; and directly confronting Schwarzenegger's administration.