Finance and Economic

U.S. airline passenger revenue rose in January for the first time in more than a year as ticket prices increased, according to a trade group.

Revenue based on a sample of U.S. carriers was up 1.4% in January compared to the same month in 2009, following 14 consecutive months of declines, the Air Transport Association (ATA) said Tuesday.

The boost in sales came as the average ticket price to fly one mile jumped 0.6%, the first rise since November 2008, offsetting the 0 guaranteed approval cash loans.4% drop in passengers.

Revenue was also boosted by a 3.4% increase in passenger sales on trans-Atlantic routes in January, the ATA said.

In December, cargo traffic surged 17% year-over-year amid growth in international trade. That compares to an 11% decline for the full year of 2009. January 2010 cargo data were not yet available. 

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Uncertainly about the future prospects for jobs in America got even foggier Wednesday as two reports on job cuts revealed conflicting results.

A report from Automatic Data Processing, a firm that collects monthly payroll data, suggested that the pace of job cuts may be slowing. But a separate report from Challenger, which predicts job cuts based on forward-looking announcements from companies, said planned cuts hit a 5-month high in January.

ADP (ADP, Fortune 500) said private-sector employers cut 22,000 jobs in January, marking the smallest decline since February of 2008. Economists surveyed by Briefing.com had forecast a loss of 30,000 jobs in January.

The number of cuts in December was revised down to 61,000 from the previously reported 84,000.

"We aren’t doing a whole lot of hiring yet, but I think you can safely say the firing is starting to stop," said John Canally, an economist at LPL Financial. "And this shows that we’re close to adding more jobs."

The service sector reported an increase of 38,000 jobs in January, marking the second consecutive month of job growth for that sector following a 21-month decline.

The figure was offset by a loss of 60,000 in the goods-producing sector and a drop of 25,000 manufacturing jobs, which marked its lowest level since January, 2008.

In a separate report Wednesday, outplacement firm Challenger, Gray & Christmas Inc, said planned job cuts had accelerated in January.

"[The Challenger report] uses a different metric," said Canally. "The job cut announcements aren’t actual layoffs, they are plans in place to cut jobs in the future, but not all of those end up being lost — some are unfilled positions and some are added back later."

Challenger said employers announced 71,482 layoffs in January, reversing what had been a steady decline in layoff announcements.

January’s figure is up 59% from December 2009, when layoffs fell to a 24-month low of 45,094. But it was a sharp drop from the 241,749 cuts announced a year ago.

"It is not uncommon to see a surge in job-cut announcements to begin the year," said Challenger CEO John Challenger. "Companies are making adjustments based on the previous year’s results and the outlook for the year ahead.

The retail and telecom sectors were the hardest hit in January, with 16,737 and 14,010 job cuts, respectively. Last month Wal-Mart (WMT, Fortune 500) said it would shed 11,200 positions at its Sam’s Clubs Warehouse outlets, and Verizon Communications (VZ, Fortune 500), announced 13,000 layoffs.

"The beginning of the year is particularly rough on retail workers, as [their] employers enter one of the slower sales periods of the year," Challenger said.

Despite the monthly decline, Canally said the report signals future job growth.

"This is still pretty much a decade-low for job cut announcements, which shows that the economy is probably about to turn around," said Canally. "The outlook is getting clearer, so I wouldn’t be too concerned about this bump in January."

Wednesday’s reports precede the closely watched monthly jobs report from the Labor Department due Friday. That’s expected to show employment levels essentially unchanged in January, according to a consensus of economists polled by Briefing.com, compared to a loss of 85,000 jobs in December.

The unemployment rate is expected to remain unchanged at 10%. 

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Imagine, in an alternate universe, Ontario had been in lengthy negotiations with Samsung Group to bring 16,000 green-collar jobs to the province, part of an ambitious plan by the Korean industrial giant to manufacture and deploy green-energy gear.

But at the 11th hour the province fails to step up and Samsung goes with Michigan, New York or Ohio instead.

Opposition parties would be accusing the McGuinty government of "losing jobs to the Americans." Industry groups would be calling Ontario a laggard without vision or guts.

Now, back to this universe. Ontario is the winner.

It kept a $7 billion clean-energy deal from flowing south, and it did it by putting the right regulations and policies in place to attract that investment.

Samsung, which has committed to building four manufacturing plants in Ontario and developing 2,500 megawatts of wind and solar projects, said it and its consortium partners were lured to Ontario because this province’s new Green Energy Act and feed-in-tariff program stood out in North America.

The response so far?

Boos from the opposition, which is accusing the government of cutting a backroom deal with a foreign company that will lead to higher electricity prices.

This kind of rhetoric ignores the fact that we’re living in 2010, not 1960.

Electricity infrastructure is aging and replacing it is going to cost more – more so in a world that puts a price on carbon emissions.

The days of cheap, dirty electricity are coming to an end. There’s no way around it.

Another reaction to the Samsung deal has been panic from local power producers, including wind and solar developers, who argue they’re being treated unfairly because of special treatment given to Samsung.

Samsung is getting roughly 4 per cent more for the solar and wind power it produces than other participants in Ontario’s feed-in-tariff (FIT) program, which already pays a generous amount to producers of renewable electricity.

The government calls this extra incentive an "economic adder," which is used as a flexible negotiating tool – not unlike tax breaks used to lure foreign investment.

It’s expected this adder, which over 25 years has a net-present value of $437 million, will contribute $1.60 more a year to the average residential electricity bill.

Put another way, that’s an increase of 0.15 per cent on the power bill of a typical household.

As one industry observer said, that’s the cost of paying for a large double-double at Tim Horton’s once a year.

The $437 million also comes with many strings attached. If Samsung and its consortium partners don’t deliver on manufacturing and jobs, then they forfeit the adder.

A legitimate question, however, is whether other parties can qualify for the same kind of economic adder granted to Samsung.

At least two other consortia, both based primarily in Ontario, are attempting to establish supply chains in the province to manufacture wind turbines and create thousands of jobs.

They may not have a long track record, and they may lack the brand power and deep pockets of a Samsung, but they are local companies deserving of local support and the confidence of their own government.

Premier Dalton McGuinty made clear last week that if any other consortia – local or foreign – want to talk about manufacturing, energy development and job creation on a large scale, then he’s all ears online payday loans.

He should be held to those words, for the sake of fairness.

Speaking of fairness, why has 500 megawatts of transmission capacity been set aside for the Korean consortium when everyone else has to duke it out for access?

The industry protest on this point is understandable.

The whole point of the Green Energy Act and FIT program is to provide equal access to the grid and electricity rates that are the same for all participants.

Only 2,500 megawatts of transmission capacity are available in Ontario, and they’re particularly scarce in the areas of southwest Ontario where Samsung is being given priority.

Other developers waiting patiently for grid access see the Korean giant as a VIP being shuffled to the front of the line. They’re angry.

But on further reflection, taking this position is akin to saying the government doesn’t have a right to reserve transmission for any big project, like a natural gas power plant?

In fact, it did exactly that when it negotiated a deal to have Sithe Global, a large U.S. power developer, build an 840-megawatt natural gas plant in Brampton. It may be a hard pill for some to swallow, but why is the Samsung deal any different? Critics, however, have another concern. They charge that the McGuinty government broke protocol by striking a sole-sourced deal with Samsung. The insinuation here is that a request for proposals should have been put out so Samsung’s rivals could submit competing bids. Opposition parties, for example, are already calling this another e-health scandal in waiting.

The leap of logic here is mind-boggling. Governments put out tenders for specific things, like fleet vehicles, office equipment and IT systems as a way to notify industry of a particular need. The vague but ongoing task of building the economy and creating jobs, on the other hand, is an open invitation to anyone with a proposal, and you can bet those proposals are being shopped around to other job-hungry jurisdictions.

We’re in a seller’s market. This isn’t about Ontario ensuring competition. This is about Ontario having to desperately compete for jobs during difficult economic times.

Indeed, the province’s strategy in this regard is quite clever, even if it is somewhat sneaky. Think about it. There appears nothing in this Samsung deal that impacts the budget. The McGuinty government is, in effect, using electricity rates to cover the cost of a major economic development strategy – kind of like adding a special fee on gasoline sales to lure a major automaker to the province.

A controversial approach to be sure, particularly with the HST coming to our hydro bills in July, but certainly this is one creative way of investing in jobs without adding to a record provincial deficit.

The Samsung deal isn’t perfect, but it’s pretty darn good. Now, Mr. Premier, you just need to open your ears and land a couple of large local deals. They’re out there, in your own backyard. You just have to listen and have a little faith in Ontario entrepreneurs.

thamilton@thestar.ca

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For the first time in a decade, Pennsylvania's bridges are actually getting healthier. That is, the number of structurally deficient bridges has decreased from a high of 6,035 in 2008 to 5,646, according to the latest rankings from the state's Department of Transportation.

Pennsylvania's focus on bridge repair has been building, beginning with the accelerated bridge program which identified 411 needy structures for repair in 2009, but actually bid 470 with another 403 bridges expected to be under contract by the end of the fiscal year.

When the federal Recovery Act came around in early 2009, dishing out $1.026 billion for transportation infrastructure to Pennsylvania, the state quickly identified another 476 crossings for repairs fast cash.

"We're making headway," said PennDOT spokesman Rich Kirkpatrick.

But much more work, not least of which will involve securing funding for bridge repairs, remains ahead.

The state is working against an infrastructure that's older than in most other parts of the country.

Almost half of its 25,322 bridges were built 50 years ago or more.

That's more than twice the national average.

Click here for a searchable database of Pennsylvania's bridges, and their current conditions.

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O’FALLON, ILL. — Balke Brown Associates of St. Louis plans to start work this spring on a 232-unit, high-end apartment development near the intersection of Green Mount Road and Frank Scott Parkway East.

The CEO, Steve Brown, said he thinks Parkway Lakeside Apartment Houses will be the premier upscale apartment complex in the St. Louis area.

Brown said the $27 million project makes sense because of its location. He said there is a strong market for luxury apartments in the area around Scott Air Force Base, which employs about 15,000 people and is largely unaffected by the current recession.

"(Many) people don’t understand that Scott Air Force Base is the Number 3 employer in the St. Louis area," Brown said. "Scott is growing and adding people."

The apartments will be built on a 20-acre site on the north side of Frank Scott Parkway, about 2,000 feet west of Green Mount Road. It will be adjacent to Green Mount Lakes Apartments, built by Balke Brown Associates five years ago and later sold. The two projects are at the edge of a booming restaurant and retail district and about a minute’s drive from Interstate 64. The company owns five acres of adjacent land planned for commercial development.

The building contractor will be Holland Construction Services of Swansea. Riverstone Residential of Dallas will manage the property for Balke Brown.

Humphreys & Partners of Dallas designed it, using the "big house" concept pioneered by that firm.

The 20 two-story apartment structures will have 10 to 14 units and be designed to look like large houses. The buildings will have only single front entrances with no breezeways or exposed stairways. Many units will have enclosed parking. Other amenities will include fireplaces, patios, balconies, a clubhouse, a swimming pool, a putting green, a walking trail and a recreational lake.

Prices will range from $950 monthly for a one-bedroom apartment to $1,650 for a two-bedroom unit with two-car garage no teletrack payday loans.

Some aldermen questioned the company’s proposal to make some parking spaces a foot shorter than the city’s 19-foot requirement, but the City Council ultimately agreed to variances that will allow 11 fewer parking spaces than the 476 that otherwise would be required by city code.

Brown said the council agreed that 60 percent of those could be 18 feet rather than 19 feet deep and said the variances will allow a design that will feature 45 percent open or green space.

"We made the argument that green is better than black," he said. "I think the project would have been less eco-friendly" if built to the letter of the code.

Ted Shekell, O’Fallon’s planning and zoning director, said city officials welcome the project.

"Balke Brown has been a great part of our town so far," he said. In addition to the earlier apartment development, the company also built an office building on the other side of I-64.

Shekell said he thinks the new development will be "a good fit for O’Fallon and this area. In a tough economic environment, we’re happy to have them interested in our community. I think it’s the kind of project you need for people who aren’t looking to buy (single-family houses) right now."

Shekell said development has slowed in O’Fallon, but the city of 30,000 still had 110 new houses started in 2009. That’s down from a 15-year average of 240, but house building is a near standstill in many area communities and around the country.

"Scott is a leveling influence on the economy of this area," Shekell said. There has been a downturn but investment has not stopped."

Brown said the area "feels like a young Chesterfield" to him.

"There is no recession there," he said.

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Thirty-eight percent of seniors who graduated from Florida colleges or universities last year were in debt, with the average amount owed on student loans at $18,621.

By comparison, the average national debt among college grads was $23,200, according to The Institute for College Access & Success’ Project on Student Debt report, which includes debt levels for the 50 states and District of Columbia and nearly 2,000 U.S. colleges and universities.

“With debt and unemployment at record levels, young college graduates may feel stuck between a rock and hard place.” said Lauren Asher, president of the Institute for College Access & Success, which produced the report. “Rising student debt is a serious problem, but struggling borrowers do have options to help manage their federal student loan debt, such as unemployment deferments and the new Income-Based Repayment program.”

In South Florida, students graduating from Nova Southeastern University in Davie had the most debt at $35,798, followed by Lynn University, a private institution in Boca Raton, with $30,175 payday loans. The proportion of students with debt from those schools was 76 percent and 37 percent respectively.

Fifty-six percent of those who graduated last year from the University of Miami were in debt. The average amount owed was $24,500. At Palm Beach Atlantic University in West Palm Beach, 69 percent of students owed money with an average debt of $19,420, while 29 percent of students from Florida International University in Miami had student loans with an average debt of $10,899.

Click here to see the state data.

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A Toronto group could be closing in on a purchase of the Phoenix Coyotes hockey team.

The National Hockey League could finalize a deal for Ice Edge Holdings to buy the Coyotes in the coming days, according to sources familiar with the situation.

Officials familiar with the negotiations between the NHL and various ownership groups said that other groups are still talking to the NHL but Ice Edge was the farthest along in the talks. They also said Ice Edge was talking to the NHL regarding some unconventional financing to help get the deal done.

Details of what the entails were not disclosed. Ice Edge has been meeting with NHL officials as well as the city of Glendale. The Phoenix suburb owns Jobing.com Arena where the Coyotes play.

The team is in Chapter 11 bankruptcy and is owned by the NHL. The league bought the team for $140 million in October after a U.S. Bankruptcy Court judge turned down a $243 million offer by Research in Motion CEO Jim Balsillie to buy the team from the then owner Jerry Moyes and move them to Hamilton, Ontario.

Ice Edge had put in a $148 million bid for the Coyotes this summer during bankruptcy proceedings but pulled back that offer. The investment group restarted talks with the NHL after the league acquired the financially struggling team no fax payday loans.

Ice Edge had talked about keeping the team in Arizona but playing some Coyotes home games outside of the Phoenix market in Canadian cities without NHL teams. The ownership group won’t start formal arena lease negotiations with Glendale until after a deal with the NHL is struck.

The Coyotes have done well on the ice this year but struggle with attendance and finances. The team is averaging 9,774 announced fans per game, according to ESPN. That’s the lowest average in the NHL and among the major pro sports leagues in the U.S.

In November, Forbes magazine pegged the Coyotes as being worth $138 million, the lowest value in the NHL.

Neither Ice Edge or the NHL responded to requests for comment. Coyotes spokesman Rob Crean referred questions to the NHL. Glendale spokeswoman Jennifer Stein declined comment.

The Coyotes have lost $300 million since moving to the Phoenix market from Winnipeg in 2002. They’ve not made the NHL playoffs since 2002 and lost many of its ticket buyers after Moyes put the team into Chapter 11 in May.

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One in six companies on the Standard & Poor’s 500 index may raise its next dividend payment as a rebound in the global economy boosts cash earnings.

AT&T Inc., Wal-Mart Stores Inc. and Raleigh, N.C.-based Progress Energy Inc. are among 79 companies in the index that may boost dividends, according to data compiled by Bloomberg. An 80th company, Ecolab Inc., the world’s largest maker of cleaning chemicals for hotels and restaurants, increased its payout Thursday. About 2 percent of the members may reduce their next payment.

“The economic recovery is in place,” said John Crawford, chief investment officer of Crawford Investment Counsel Inc. in Atlanta. “With that you will see some improvement in dividends in an overall sense, but they, too, will be coming along at a slower pace.”

Companies that have large market share, strong finances and pay above-average dividends are attractive for investors looking for safe returns as 10-year U.S. Treasuries yield less than 3.5 percent, said Crawford, who manages $2.5 billion in securities.

AT&T, based in Dallas, has a projected 12-month dividend yield of 6.1 percent, and Progress, the owner of utilities in three Southeast states, is expected to pay 6.2 percent.

Dividends tend to reflect the prior year’s profits and so won’t rebound for many U.S. companies until 2011, said Kevin Shacknofsky, who manages about $2 billion for Alpine Mutual Funds in Purchase, N.Y.

Some of the increases in dividends next year will be from companies that had cut payments or eliminated them this year or in 2008 because of “near-death experiences,” Shacknofsky said.

Thirty-three companies on the S&P 500 had lower dividend payments this year compared with 2008, Bloomberg data show.

Banks including Bank of America and Citigroup slashed dividends amid the deepest recession since the 1930s. Citigroup, which paid 32 cents a share, discontinued its dividend this year. Bank of America reduced its quarterly payment to 1 cent a share from as much as 64 cents last year.

“The biggest payers out there were the financials,” Shacknofsky said. “So in dollar terms, dividends are still weak.”

Companies are also beginning to use cash from rebounding profits to buy back stock. Chubb Corp., the insurer of commercial property and high-end homes, approved a repurchase program this week of 25 million shares.

General Dynamics Corp., the producer of Abrams battle tanks and Gulfstream business jets, this week announced plans to buy back as many as 10 million shares. The company is forecast by Bloomberg to raise its dividend in March by 2 cents to 40 cents a share.

Shacknofsky said companies should be raising dividends instead of buying back shares. “They should leave playing the market to investors, and they should rather give cash back as dividends,” he said.

Select companies such as Coca-Cola Co. and Wal-Mart have held up well during the recession and maintained dividend increases, Crawford said. Those companies are a safe haven during this period of low interest rates and slow recovery.

“That’s why AT&T and Progress and some of these names are attractive,” Crawford said. “You are just as safe, and you’re better off because you have higher yield.”

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The Toronto stock market closed slightly higher Friday as some investors speculated Thursday’s global sell-off in equities triggered by Dubai’s attempt to delay debt repayments was overdone.

The S&P/TSX composite index advanced 27.61 points to 11,464.41 after tumbling 200 points Thursday in the wake of an announcement that Dubai World, a government investment company, had asked creditors to postpone its forthcoming payments on $60 billion (U.S.) in debt until May.

Thursday’s loss was responsible for a TSX loss of 114.92 points, or 1 per cent, for the week.

New York markets tumbled Friday, catching up with the losses racked up by other global markets after being closed Thursday for the U.S. Thanksgiving holiday.

The Dow Jones industrial average fell 154.48 points to 10,309.92 at the end of a shortened session. The blue-chip index was flat for the week, up a slight eight points.

The Nasdaq composite index lost 37.61 points to 2,138.44. The S&P 500 fell 23.36 points to 1,087.27.

The Dubai announcement Wednesday stoked fears of a potential default and contagion around the global financial system, particularly in emerging markets. But a day later, investors were taking a harder look at what the Dubai debt crisis means.

Finance Minister Jim Flaherty said there wasn’t any reason for “significant concern” about spillover effects from Dubai’s attempt to delay debt repayments and “any effects would be quite mild on the Canadian financial system.”

Blair Falconer, portfolio manager at HSBC Securities Canada, observed that investors felt better Friday knowing that Canadian financials have limited or no exposure to the Dubai debt.

The Canadian dollar fell 0.09 of a cent to 94.21 cents after a flight to the greenback had sent the loonie down 1.35 cents on Thursday.

The financial sector led gainers, up 0.8 per cent. The industrials sector ran ahead 0.91 per cent.

Commodities were also weaker, but well off early lows, with the January crude contract on the New York Mercantile Exchange falling $1.91 to $76.05 a barrel. The energy sector was off 0.12 per cent.

The gold sector was off 1.83 per cent as bullion prices also gave up ground with the December gold contract on the Nymex down $12.80 to $1,174.20 an ounce.

The Canadian Press

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China on Tuesday restated its long-standing policy to maintain the basic stability of the yuan at a reasonable and balanced level, after President Barack Obama said he would discuss the currency when he visits Beijing.

Asked about Obama’s comments, Foreign Ministry spokesman Qin Gang said China would keep improving the currency’s exchange rate mechanism with a view to gradually making the yuan more flexible.

Qin added that China hoped the United States, as the most important economy in the world, would pursue a stable fiscal policy to keep the dollar’s exchange rate steady and ensure its own growth and that of other nations.

“I want to make it clear that the United States is the number-one economic entity in the world,” he told a regular news conference.

“We hope that … the United States can overcome the difficulties brought by the international financial crisis and at the same time maintain the medium-term and long-term sustainability of its fiscal policy,” Qin said.

Obama told Reuters in an interview in Washington that he would raise the issue of the yuan, which many economists and U.S. manufacturers consider to be undervalued, when he comes to China next week.

But Obama also said the two countries share a common interest in helping to rebalance the global economy in order to deliver sustainable growth, a view echoed by Qin payday advance.

“If you ask me how relations between the two countries are right now, my first answer is: the economies of China and the United States are mutually related, integrated, dependent on each other and getting closer to each other day by day.”

But there are tensions between the two.

U.S. manufacturers complain that Beijing artificially holds the value of the yuan down to make its exports cheaper and American goods more expensive for Chinese consumers.

Economists say this has led to imbalances in the world economy by contributing to big trade deficits in the United States and trade surpluses in China.

Leaders of the Group of 20 developed and emerging economies have pledged to aim for policies to ease these imbalances.

But China has also been angered by recent controls slapped on some of its imports, and Qin issued a new warning against barriers to commerce.

“We urge the U.S. side to make positive efforts with China to resolve frictions and questions in trade, including acknowledging China’s status as a full market economy and halting some protectionist measures,” Qin said.

(Reporting by Emma Graham-Harrison and Yu Le; Editing by Alan Wheatley and Ken Wills)

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