World Business

Pricey combustibles could doom roll flying. Air Berlin, easyJet, and others are running into big trouble

by Dinah Deckstein

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Last fall and winter was not a happy time for Lufthansa CEO Wolfgang Mayrhuber. But it wasn’t just the uncooperative weather and succession of strikes that were making his life so miserable. Mayrhuber, a 61-year-old originally from Austria, faced heavy critique for being too hesitant and overly risk-averse, all because he passed up opportunities to acquire charter airline Condor and Italian competitor Alitalia.

But Mayrhuber stoically ignored the criticism and sought refresh in an old scintilla of airline industry wisdom: Even a missed opportunity can sometimes end up being good concern. At the time, the Lufthansa CEO couldn’t have imagined in what manner quickly that adage would become reality.

Six months later the airline industry, celebrated not too long ago as an engine of economic advancement, has plunged into the deepest crisis in its recent history. Even worse, diverse the period following the Sept. 11, 2001 terrorist attacks upon New York and Washington, whereas airlines, especially greater US carriers, went into a dangerous tailspin, this time there is no end in sight.

More Painful than Any Other

Since the price of oil broke the barrier of $130 (€82) a barrel, it has become clear that the former beneficiaries of globalization are operating on very shaky ground. Flying on high forward prognoses that saw global air travel enjoying growth rates of about 5 percent a year, airline executives were ordering new aircraft at a record pace and offering flights to likewise the most remote spots on land. Now the industry seems headed for an abrupt crash-landing, one that could be more painful that any other crisis it has faced since World War II.

“The rising oil price will completely transform our industry,” predicts Louis Gallois, the head of Airbus parent company EADS, “certainly towards aircraft and engine manufacturers, but it will also head to serious changes adhering the side of the airlines, airports and air traffic control.”

Jean-Cyril Spinetta, the CEO of Air France/KLM, has some verily more powerful take on the situation. “If the oil reward rises above $200 (€125) a barrel, we airlines will all be dead,” he warns.

Experts estimate that the busy vigor will accumulate losses of at least €1.5 billion ($2.39 billion) this year by one’s self. Should the price of oil level over at $135 (€85) a barrel, total busy vigor losses could jump to just under €4 billion ($6.36 billion), according to estimates by the International Air Transport Association (IATA).

Smaller or poorly managed airlines, where paraffine oil costs even now make up half of total expenditures, are hardly likely to survive. At least two dozen airlines have gone under in the above six months alone — a record for such a short period of opportunity. “After this period of consolidation, there wish only be five airlines left in Europe,” says John Kohlsaat, easyJet’s German chief executory, “British Airways, Air France/KLM, Lufthansa, Ryanair and us.”

Cutbacks of 12,000 Jobs

US carriers like American Airlines, Continental and Lufthansa partner United are already taking large numbers of older jets at a loss of circulation and plan combined cutbacks of up to 12,000 jobs. European airlines approve Air France, TUIfly and Air Berlin are also thinning out their fleets and route systems to prepare for a rough hibernate in advance, a unoccupied time of year when air travel falls anyway relative to summer months.

But Lufthansa seems to be defying the acme — for now. On the one hand, Mayrhuber and his senior executives have imposed a hiring freeze for administrative jobs. And the airline could face additional challenges if ground personnel and a portion of the onboard workforce come through with a menace to go on strike — at the beginning of the summer intermission season, not any less.

How universities and alumni associations improve by marketing undergrads to financial giants—like Bank of America

by Jessica Silver-Greenberg and Ben Elgin

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Illustrations by dint of. J. Alex Stamos

Universities and their alumni associations have discovered one unlikely and disturbing source of revenue: Increasingly, they are selling students’ exterior information to big credit-card companies eager for not old customers.

Using state public disclosure laws, BusinessWeek has obtained more than two twelve faithful contracts between major schools and card-issuing banks keen to sign up undergraduates with mounting expenses for tuition, books, and travel. In some instances, universities and alumni groups entertain larger payments from the banks if students appliance their school-branded cards more many times.

The growing monetary alliance between schools and banks raises questions about whether universities are encouraging students to incur additional high-interest debt at a time then many

young people graduate from body owing tens of thousands of dollars. Most undergraduates lack substantial income of their own and are especially vulnerable to late fees and other penalties if they fall behind on monthly payments.

BusinessWeek’s investigation parallels a separate scrutinize by New York Attorney General Andrew Cuomo. He is looking into a range of relationships between schools and pecuniary institutions. “It seems that the schools are simply selecting the university credit card based on who pays the school the most, and that may not be best for students, especially in these hard economic times,” says Benjamin Lawsky, a Cuomo aide. Last year, Cuomo cracked from a thin to a dense state on ties between colleges and private tuition lenders, some of whom were remunerative schools to promote them to financially strapped students.

Some of the country’s best-known and largest schools have multimillion-dollar credit-card deals, including the Universities of Michigan, Minnesota, and South Florida. Private schools moreover have these typically secret deals, but information about public institutions is to a greater degree readily obtainable under exposure laws.

Alumni groups often take the lead in arranging for so-called affinity credit cards, many of them decorated with school mascots and logos. Schools usually approve the contracts and provide access to student denunciation such as e-mail direct one’s speech and phone numbers. Some schools also allow on-campus hawking of credit cards through T-shirt giveaways, phone campaigns, and in-store promotions.

Universities rarely treat for favorable terms for their students, according to the vulgar familiar through the practice. On the contrary, more schools and booster groups entice undergraduates to wonder up by reason of cards through low initial concern rates that are lief replaced by the agency of steep double-digit rates.

The University of Iowa’s alumni association sent a credit-card mailer to students in May 2007, announcing in large bold letters “outstanding monetary benefits for students,” including a 4.9% interest rate. “Don’t miss this unique opportunity to make clear your University of Iowa pride, while you enjoy truly outstanding credit card benefits and services,” urged a marketing letter signed by Vince Nelson, alumni president. Iowa students who scrutinized the accompanying paperwork found that the 4.9% rate lasted only six months before leaping to 18.24%, a common technique in the credit-card industry.

In exchange for helping snare customers from Iowa’s 29,000-person learner body, card issuer MBNA (at present owned by Bank of America (BAC)) agreed to compensation the school’s alumni group about $1 million a year, some one-fourth of the organization’s operating budget. This kind of dependence on credit-card revenue isn’t unusual. The University of Delaware’s alumni group receives end for end $300,000 a year–more than 90% of its revenues–for delivering student contiguity knowledge to BofA.

KUWAIT CITY Kuwait’s official news direction says the tiny Gulf country has named any ambassador to Iraq for the first era since the 1991 Gulf War.

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Thursday’s report quotes the Kuwaiti foreign minister as saying Ali al-Momen, a former military chief of shillelah, will take the post.

Kuwait closed its embassy in Iraq in 1990, after Saddam Hussein’s troops invaded its oil-rich neighbor.

The EC chief facing pacts that ban cross-border competition is changing the tune on musicians’ copyright payments

by Honor Mahony

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The European Commission on Wednesday (16 July) told the organisations that collect music copyright fees for artists that they have to end agreements that stop them from competing from one side of to the other borders.

At the moment, music copyright groups have a body of contracts object that artists may collect payments only from an agency in their have a title to country.

But after consultation with industry and artists, following a complaint by broadcaster RTL and British online group Music Choice, the commission came down on the border of freer contest, saying this would allow authors to choose on the basis of quality of service, efficiency of collection and level of management fees deducted.

At the moment, companies such as RTL that want to offer a pan-European furniture cannot obtain a single licence but have to negotiate with individual general collecting societies.

The decision also says the societies should have being allowed to permission material for use upon the body the internet or by broadcasters exterior their hold countries.

Competition agent Neelie Kroes said the have commerce could “help cultural diversity by dint of. encouraging collecting societies to endeavor composers and lyricists a better deal in stipulations of collecting the money to which they are entitled”.

But artists gain reacted angrily to Brussels’ move, believing it will mean that less celebrated musicians and smaller collecting societies will subsist hurt by it. They also believe that EU-wide music rights may vanquish their royalties, with musicians making money from their music after they register the copyright with collective rights managers.

CISAC, every international organisation representing the creative community, condemned the decision, saying it would lead to “a calamitous decline in artistic creation, cultural difference and creators’ income.”

It also criticised the commission for claiming to act in artists’ interests while it “imposed” the conclusion close up to their “expressed wishes.”

The European musicians’ organisation also blasted Brussels conducive to saying the settlement will benefit them and that it was acting in their interests.

The European Composers and Songwriters Alliance (ECSA) said this was a “unilateral claim” by which they strongly disagreed.

Meanwhile, Dutch authors’ society Buma/Stemra welcomed the commission’s decision. But it said Brussels should now be turning its attention to what it called “a much bigger menace” to fair competition.

It accused major music publishers of not allowing small and medium-sized collecting societies to use popular Anglo-American music for online and mobile purposes, instead entrusting these “money-spinning rights” to German, French and British collecting societies.

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I’m leaving tomorrow on a 24-day reporting trip to Bangladesh, India, Tanzania, and Egypt. The goal is to report on some of the greatest in quantity innovative projects aimed at using commerce methods to solve social problems. Over the past few months, I’ve thrown a wide net looking for social-improvement projects that work and give promise of being sustainable and, at some point, growing swiftly. The six that I’m visiting on this trip seem to fit the fondle.

Why am I going on this journey? Simple. I be destitute of to help change the world. Conventional control, NGO, and man of means approaches to addressing poverty, ignorance, sickness, and environmental degradation haven’t worked that well. So are there other, in a more excellent way, ways of getting things translated? A slew of social entrepreneurs think so. There’s no questioning their artlessness and their energy. But manifold of their approaches haven’t proven themselves yet. If I be possible to shine a light in succession what works and what doesn’t, I can help steer human energy and financial capital in the rightful directions.

Cory Booker, the mayor of Newark, New Jersey, visited our offices yesterday and met with a handful of editors and writers. He talked about his efforts to revive Newark, a crumbling industrial city. Booker pledged to turn Newark into “the Silicon Valley of communicative entrepreneurship.” There’s plenty of be in action for social entrepreneurs in the US, and I’ll be getting to that later. But, on this account that now, it’s to South Asia we go.

So, come together for the ride. I plan on posting at least once a day.

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A recent New York Times article (”Industries Allied to Cap Carbon Differ On the Details,” June 2, 2008, Business Day) suggested that current proposals for a “cap-and-trade” system in quest of carbon emissions may end up pitting different sectors of the economy against one another. The article also identified the potential to create winners and losers on a state-by-state or region-by-region basis.

The primary point to be solved lies with the mechanism used to determined the carbon cap and allocate emissions allowances. One proposal would establish allowances based adhering running water 2008 emissions from electric-generating resources.

Under this suggestion, states such considered in the state of those in the Northwest that bear worked unprosperous very the out of the reach of several decades to curb energy consumption will have a much stiffer objection compared with those that have done nothing.

On the other hand, if the a whole is established to grant everyone an “medial sum” emissions allowance, soon afterward those who have already invested in efficiency will receive additional credit that might even be perceived as a stroke of luck by others.

The difference in economic consequences between these two approaches is significant. The final outcome of the carbon-emissions administration debate will undoubtedly wish a greater impact on the strategies that resolution have being deployed to sure a clean, reliable, and affordable supply of power for the future in the present life in the Northwest.

Our region has already been blessed with a large hydroelectric power resource that has historically met most of the region’s need towards electricity with carbon-neutral, inexpensive power. And, through 30 years of point of concentration on energy efficiency, we have been able to stretch that resource even further.

According to the Northwest Power and Conservation Council, over the past 30 years, the neighborhood has managed to save again than 3,300 average megawatts of electric power. That’s enough spiritedness to power three cities the size of Seattle. Not only electricity is being saved; consumers paid out nearly $1.3 billion less on their utility bills and lowered carbon emissions by 13.5 million tons, what one. is like taking in addition than two million cars off the road or planting a forest across all of Snohomish and King counties.

Part of this success was driven by a little-known effort started more than 10 years ago. In 1996, Bonneville Power Administration, electric utilities, state agencies and public-interest groups joined in the same parturition to augment energy efficiency in the region. The result was the Northwest Energy Efficiency Alliance (NEEA)

Despite all of these efforts, the expenditure of sovereign has steadily increased. For each megawatt saved during the past decade, the region has added a megawatt of new electric load. The Northwest’s population has grown at two times the rate of the rest of the country, even faster than India’s. Electricity consumed by consumer electronics alone

Even with the planned dramatic increases in efficiencies, these efforts will not meet the new growth. New electric generating and transmission facilities will need to be added that will likely grow electricity prices with respect to Northwest consumers. All of which brings us back to carbon cap and trade. The magnitude of cost increases resulting from new energy generation will be impacted by how carbon allowances are allocated.

Regardless of which custom the cap-and-trade debate turns out, meeting the region’s growing energy needs requires a disagreeing portfolio of resources by dint of. potency efficiency being of the kind which its cornerstone. It has historically been our lowest-cost, lowest-risk resource through expressive environmental benefits.

We can be supercilious of the accomplishments we have already made in energy efficiency in the Northwest, but it is clear that the future will demand much more. It’s time for people from across the division to come together again to meet these new challenges. With our history of initiative, innovation and collaboration, the Northwest is in a prime position to escort the nation into the next era of energy-efficiency accomplishments and maintain a flourishing regional economy.

Original text: http://seattletimes.nwsource.com/html/opinion/2008055277_craigop17.html?syndication=rss