World Business

With sales plummeting and no financing available for reorganization, struggling retailers such as Bon-Ton and Dillard’s may be in big trouble

By Matthew Boyle

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This holiday season, any retailer not named Wal-Mart (WMT) has reason to worry. Paltry profits and debt-laden balance sheets mean some players are facing not just tough times, if it be not that potential extinction. With U.S. retail sales taking a registry 2.8% make last month and Deloitte Research’s consumer spending index turning negative for the first time as 1980, the meteorological character is unforgiving. Big names such viewed like Circuit City (CCTYQ), Linens ‘born Things, and Steve & Barry’s are among the 22 merchants that have already filed for bankruptcy this year. While retailers who filed for bankruptcy in recent years repeatedly could live to see another day, that may no longer be true. "You be able to’t get the financing to reorganize, to such a degree we are in a world of liquidation," says Howard Davidowitz, chairman of deal out in small portions consultancy Davidowitz & Associates.

The question now is: Who is most at risk? Retailers who are No. 2 or 3 in their categories—witness Circuit City’sitting position positive to Best Buy (BBY)—look particularly vulnerable. Not only are they likely to look steeper sales declines than stronger rivals, but many took onward excessive debt to fund diffusion in the middle of the cheap interest rates of modern years. The number of credit rating downgrades for retailers from Standard & Poor’s this year—53—has already surpassed the total for all of 2007, and S&P says it’s likely to issue more before yearend. "It’s been a extended time since we’ve seen some environment as challenging as this," says Deloitte Research Chief Economist Carl Steidtmann.

Analysts are keeping a close eye in continuance regional course of life supplies such as York (Pa.)-based Bon-Ton (BONT) and Little Rock-based Dillard’s (DDS). Both chains have long been dwarfed by the likes of Macy’s (M), Kohl’s (KSS), and J.C. Penney (JCP) and have seen their credit ratings slip in recent months in light of falling sales and rising leverage.

Bon-Ton, by same-store sales down 6.3% so far this year, looks the most challenged, analysts allege. The chain has weighty transgression afterward spending more than $1 billion to buy 142 stores from Saks (SKS) couple years ago, and its supplies are mainly in the struggling Rust Belt. While Bon-Ton declined to comment, it issued a statement on Nov. 6 to argue the chain has "excess borrowing dimensions" under its credit facility. As S&P algebraist Diane Shand notes: "The big annoyance is whether their vendors get nervous and don’t ship to them."

Dillard’s, meanwhile, has already closed 20 of its 330 stores this year amid a 6% sales decline, with more closings planned for 2009. It’s also facing investor pressure to overtake senior management, which is dominated by means of members of the founding Dillard family. Dillard’s says it currently has plenty of room to borrow under its $1.2 billion credit facility, but Fitch credit analyst Monica Aggarwal argues declining sales and avails margins will pressure the company "for one extended period of time." Analysts are skeptical with regard to the chain’s ability to turn itself around.

Women’sitting dress shop Talbots (TLB) is another retailer to be on the lookout. Same-store sales in its third quarter dropped 14%, and the company recently determined to jettison the J. Jill accidental clothing brand it bought two years ago for a half-billion dollars. The issue is whether they’ll supply anyone to buy it. "J. Jill was an asinine acquisition," says Antony Karabus, CEO of sell in small quantities consultancy Karabus Management. Talbots, which has begun sacrifice heavy discounts, declined to make notes. For all the struggles of the holiday season, industrial art observers agree that the positive shakeout could come in January. As Neil Stern of retail consultancy McMillan Doolittle says: "It’s going to get very ugly post-Christmas."

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Investors Thursday digested tidings of a possible law-making compound to aid Detroit, and again gloomy data in succession manufacturing and the labor emporium

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U.S. stocks were mixed in volatile trading Thursday afternoon as Wall Street awaited every pronunciamento from lawmakers without ceasing a possible compromise plan to aid the beleaguered U.S. auto industry.

Equity indexes were struggling to hold above support levels to the degree that Treasury Secretary Henry Paulson said the U.S. has avoided a financial collapse, and that the mistakes of the past should not ever come to pass again. Thursday’s changeableness occurred judgment Friday’s options expiry, notes S&P MarketScope.

Traders regarded a recent batch of bad news on the U.S. economy Thursday: Weekly first-time jobless claims hit a 16-year high, the Philadelphia Fed’s manufacturing survey slumped in November, and U.S. leading relating to housekeeping indicators fell in October.

Oil stocks were lower like awkward oil futures slumped to near $50 per barrel in New York trading.

Bonds were soaring as investors sought the safety of government debt. The dollar fore-finger gained. Gold futures were higher.

At 2:10 p.m. ET on Thursday, the Dow Jones industrial average was lower by 13.94 points at 7,983.34. The broad S&P 500 index shed 8.73 points to 797.85, and the tech-heavy Nasdaq composite characteristic added 0.64 points to 1,387.06.

On the New York Stock Exchange, 24 public funds fell in excellence for each 7 that advanced. The ratio on the Nasdaq was 19-8 negative. Trading was moderate in the presence of Friday’s options expiry.

Stocks in Europe finished solidly lower, with the FTSE 100 index in London along the course of 3.26%, the CAC 40 index in Paris off 3.48%, and German’s DAX index lower by 3.08%. Asian markets fell, by Tokyo public funds plunging 6.89%, Hong Kong down 4.04%, and Shanghai lower by the agency of 1.67%.

Michigan Democrats Carl Levin and Debbie Stabenow, along through Ohio Republican George Voinovich and Missouri Republican Christopher Bond declared they have reached a bipartisan agreement on a bill to assist the struggling automotive sedulousness. A news conference was planned for 2.30 p.m. ET “to discuss the particulars of a bipartisan agreement on a bill to support the auto industry,” the statement said. But the Senate deal is “a non-starter” in House according to sources close to CNBC political commentator John Harwood. The stock market is nervous about prospect of General Motors (GM) or Ford Motor Co. (F) filing for Chapter 11 bankruptcy.

But few on Wall Street in a backward direction. \ a bailout. U.S. automakers have been pleading with Congress for $25 billion in emergency body of executive officers aid to weather a steep business downturn. The CEOs of altogether three companies testified before two congressional committees this week, but came away empty-handed. The White House favors using $25 billion already authorized and appropriated through the Energy Department to provide loans for ailing automakers.

Reuters reports the money-losing finance company GMAC said it has filed to get a bank holding company, joining the growing list of lenders making such a move in a bid to secure U.S. Treasury funds. GMAC said its application for funds from the government’s $700 billion Troubled Asset Relief Program is conditional on its seemly a bank. The company, which had beforehand said it was contemplating becoming a bank, did not divulge in what state much it might seek from the government. Private equity firm Cerberus Capital Management LP owns 51% of Detroit-based GMAC and automaker General Motors owns 49%.

In economic news Thursday, at the beginning jobless claims jumped 27,000 to 542,000 in the week ended Nov. 15, from a revised 515,000 in the prior week (516,000 previously). These data take on more importance as they fill identical spaces with the Bureau of Labor Statistics’ payroll survey week for the November U.S. employment report, according to Action Economics.

“However, the market has already priced in a recession levels in the labor market and these facts shouldn’t alter those perceptions,” wrote Action Economics analysts in a website posting Thursday.

The Philadelphia Fed index extended its decline to -39.3 in November after tumbling 40 points to -37.5 in October. All of the components were hammered lower last month, and and continued lower this month. The agency component fell to -25.2 from -18.0. New orders slipped to -31.4 from -30.5, the lowest level since 1980. Prices paid plunged to -30.7 from 7.2, while prices received dropped to -15.5 from 5.3. The last mentioned is the worst since 2003. The 6-month in our teeth business terms declined to -10.4 from -4.2, with capital expenditures at -9.0 against -2.0.

U.S. leading indicators dropped to 0.8% in October, in the same manner with expected, from a downwardly revised 0.1% in September (0.3% previously).

Treasury Secretary Paulson discusses the economy at 11:00 a.m. EST. St. Louis Fed President James Bullard was scheduled to speak Thursday tonight.

The Swiss National Bank made a wonder one-percentage-point cut in its key rate, its second reduction this month, according to an Associated Press report. The central bank lowered its interest-rate target band to 0.5%-1.5%. The central bank’s decision comes amid expectations other central banks, including the U.S. Federal Reserve give by will also cut rates farther on to support growth. Before this month, the Swiss border had reduced its rates excepting that once in the last 5-1/2 years.

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A rapid drop in inflation may help shoppers’ dollars go further, on the contrary it’sitting a disturbing trending for investors

By Ben Steverman

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Forget inflation for now. Prices are falling on almost everything, including stocks.

Investors emergency to put to a new reality: A few months ago, inflation was a top worry, especially the impact of sky-high fuel prices. Now, although consumers can celebrate falling prices at the gas pump, investors’ worry is exactly the opposite.

Instead of inflation, the problem is deflation, a downward drift in prices that could squeeze incorporated profits and investor returns to uncomfortable levels.

On Nov. 18, a government report showed an unexpectedly large 1% drop in the October consumer price index, including an 8.6% plunge in energy prices last month. Excluding energy and food, the CPI fell 0.1%, the earliest drop in the so-called "core" index considering 1982.

On Nov. 17, the producer estimation index, a measure of wholesale prices, lay prostrate 2.8% in October, including a 12.8% descend in animation prices. That was the largest decline in the PPI in the report’s 61-year history.

After a rope rise in prices in early 2008, consumer prices are still up 3.7% in the past year, notwithstanding that that’s down from a 4.9% annual increase in September.

Economists say the newly come price declines do help consumers (BusinessWeek.com, 11/19/08).

However, predominant deflation is also a sign of the extreme stress the economy is under right now. "Clearly, demand is down worldwide," says Brian Levitt, economist at OppenheimerFunds (OPY).

Falling prices—for everything from merchandise to airline tickets to habiliments—are a sign of in what condition much economic activity has slowed. For example, consumer animation prices are right side 43.1% in the past three months. In October lonely, airfares dropped 4.8%, and apparel prices dropped 1%.

In a sign of manufacturing’s weakness, John Ryding of RDQ Economics points finished that scrap steel prices have fallen from a high of $523 per twenty hundred gross in August to $144 per 2 last week.

Falling prices aren’t just a symptom of economic weakness, they’re also destructive in and of themselves. "A deflation helix is in all probability the biggest risk to the good husbandry," Levitt says.

As demand declines and prices fall, companies cut trade and investment, slowing economic growth even further.

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WASHINGTON Barack Obama is likable to choose Arizona Gov. Janet Napolitano for the job of secretary of homeland security, top Obama advisers and several Democrats related Thursday as the shape of the president-elect’s Cabinet begins to emerge.

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The Obama advisers cautioned that not one final resolution has been made adhering putting Napolitano in charge of the Homeland Security department, the heavy agency created by means of Congress after the Sept. 11, 2001, terrorist attacks. But the advisers said she was by far the top contender.

Thus far, Obama has informally selected Washington advocate Eric Holder taken in the character of attorney general and former Senate Majority Leader Tom Daschle as health and human services secretary. The plans could have existence sidetracked by sudden glitches in the final vetting process, officials note.

Sen. Hillary Rodham Clinton seems more well-suited than ever to have existence Obama’sitting secretary of state. Clinton is deciding whether to understand that post since America’s top diplomat, her associates said.

Among other Cabinet posts: senior Democrats say in that place is a mighty possibility that Defense Secretary Robert Gates would stay temporarily and later give way to former Navy Secretary Richard Danzig. Even so, Republican Sen. Chuck Hagel of Nebraska and Democratic Sen. Jack Reed of Rhode Island also are said to be under consideration.

Democrats also say that several clan remain in the running for the Treasury Secretary position, including Timothy Geithner, president of Federal Reserve Bank of New York; Lawrence Summers, constructer treasury secretary and one-time Harvard University president; and former Federal Reserve Chairman Paul Volcker.

Several news organizations reported Thursday that Chicago businesswoman Penny Pritzker, who was Obama’s national campaign finance chairman, is his leading choice to become secretary of commerce. But the Obama advisers strongly disputed the reports, and officials say Laura D’Andrea Tyson, the former chair of White House Council of Economic Advisers under President Clinton, remained in the running.

The Obama advisers and Democrats discussed the Cabinet positions only in succession grounds of anonymity because of the private nature of the screening mode of operation.

Obama appears to be assembling a team that includes a be blended of longtime aides, Washington insiders and a affusion of Democratic governors. Besides Napolitano, strong contenders for Cabinet posts comprise New Mexico Gov. Bill Richardson and Kansas Gov. Kathleen Sebelius.

Sebelius and Napolitano, who once was Arizona’s attorney general, were among the first governors to commit to Obama’s candidacy. Richardson endorsed Obama in imitation of ending his possess presidential request, angering Clinton and her husband, preceding president Bill Clinton.

As governor, Napolitano has fought to curb unlawful immigration, but she has been skeptical that building a fence along the border will solve the problem. She once said, “You build a 50-foot wall, somebody will get a 51-foot ladder.”

Last year, her state passed a code that requires all Arizona businesses to use the federal online database, E-Verify, to confirm that new hires have valid Social Security numbers and are eligible for employment. This has been a cornerstone of the Bush administration’s immigration policy.

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WASHINGTON

The Bush president and cabinet has until Friday to publish new rules in order in favor of them to catch of fish effect before President-elect Barack Obama is sworn in. Otherwise, Obama consider power to loose them through the stroke of a pen.

A rule eliminating the mandatory, independent advice of government scientists in decisions about whether dams, highways and other projects are likely to injure species looked likable to come together the deadline, leaving the simply chance by reason of a quick reversal to Congress.

Drew Hammill, a spokesman for House Speaker Nancy Pelosi, D-Calif., declared the House will be looking at ways to overturn the final endangered species rules and other one-minute-to-midnight regulations.

“The House, in seeking the advice from one side the incoming administration and to the purpose committees, will review what oversight tools are at our arrangement regarding this and other last-minute attempts to inflict severe mischief to the statute in the waning moments of the Bush administration,” Hammill said.

A Nov. 12 version of the final endangered species rules obtained by The Associated Press has changed little from the original proposal, despite the more than 250,000 comments received since it was first proposed in August.

The rules eliminate the input of federal wildlife scientists in some endangered figure cases, allowing the federal agency in ascribe of building, authorizing or funding a plot to determine for itself whether the project is likely to harm endangered wildlife and plants.

Current regulations require independent wildlife biologists to signify off without interruption these decisions before a project can go forward, at times modifying the design to better protect species.

The regulations furthermore bar federal agencies from assessing emissions of the gases blamed for global warming on species and habitats, a tactic environmentalists have tried to use to block new coal-fired power plants. But the Bush administration feels that endangered species laws should not be used to regulate greenhouse gases.

Tina Kreisher, an Interior Department spokeswoman, could not confirm whether the rule would be published before the deadline, saying only that the White House was still reviewing it. She said it was possible more changes could be made.

“We started this; we want to achieve this,” Kreisher said.

If the rules go into event before Obama takes business, they will be difficult to overturn since it would require the new administration to restart the rule-making process. Congress, however, could counterpart the rules through the Congressional Review Act, a law that allows review of new federal regulations.

It’s been used once in the past 12 years, but more Democratic lawmakers have said they may employ it to block the endangered species rules and other last-minute regulations by the Bush administration.

“This is a conspicuous example of the brash giveaways to diligence we expect to conceive during the Bush administration’s final days, and a new Congress will stand at the ready to use our authority to overturn this and other harmful rules,” said Rep. Edward Markey, D-Mass., chair of the House select committee for energy independence and global warming.

The Bush administration has made none shrouded of its closely fixed to complete the endangered species changes quickly.

When the proposal was leading announced in August, the public was given 30 days to comment. That conclusion was doubled subsequent Democratic lawmakers pressed for more time.

Then, last month, the head of the endangered species program corralled 15 experts in Washington to sort through 200,000 comments in 32 hours.

“This is definitely lightning quick,” said John Kostyack, executive director of the National Wildlife Federation’session Wildlife Conservation and Global Warming initiative. “I would be surprised that they spent all this time rushing it through if it wasn’t greased.”

If successful, the Bush administration will accomplish through rules what opposed to change Republicans have been unable to bring to pass in Congress: ending some environmental reviews that developers and other federal agencies blame for delays and cost increases onward many projects.

Supporters of the changes likewise expected it to be finalized later this week.

The Pacific Legal Foundation, which advocates for exclusive right rights, urged that the rules be approved.

“Litigious activists have used the Endangered Species Act to fight projects,” Reed Hopper, the foundation’s principal attorney, related in a statement. “The administration’s stream proposal is a remove toward curbing these abuses.”

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Interior Department: www.doi.gov

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WASHINGTON

Clinton accepted several restrictions on his business and philanthropic activities to remove any obstacle to his matron’s nomination if the Cabinet job is formally offered and accepted, related the associates, who insisted that they not be identified. “I’ll do be it what it may they lack,” Clinton said at a public appearance Wednesday.

The discussions came at the same time that Obama moved forward in putting together the team he leave bring to office in January. He has decided to nominate Tom Daschle, the maker Senate Democratic cock of the walk, as secretary of freedom from disease and human services, Obama’s advisers said Wednesday. Daschle has accepted the offer, which would make him a point man in Obama’s plan to expand health-care coverage.

Although Daschle’s nomination determine not be officially announced for a while, the transition team made the people several expected White House appointments Wednesday. Among them were David Axelrod, who was Obama’session chief campaign strategist and now will officiate as elder adviser to the president, and Gregory Craig, who was President Clinton’s impeachment defense lawyer and very lately will manipulate as White House counsel.

In addition, Lisa Brown, former counsel to Vice President Al Gore, will serve of the same kind with staff writer, and Christopher Lu, a top aide in Obama’s Senate office, will be Cabinet secretary.

As for Sen. Clinton’sitting situation, even if the guidelines because the former president’s coming activities are on the verge of being resolved, Obama and the senator need to decide if they be possible to put the rancor of their long and calamitous primary battle in the rear them.

Continuing tensions could foreshadow a complex relationship should Sen. Clinton become secretary of state. By putting her in the Cabinet, Obama could take out a potential infliction in the Senate on issues such as health care and a potential rival for renomination in 2012 if his term proves rocky. But he could also face a rival power center within his own administration with her on his team.

In the spent few days, the former president has agreed to disclose some major donors to his charitable establishment and to subject his futurity foundation activities and paid speeches to review by the White House Counsel’s Office and the State Department ethics office, according to Democrats clog to the negotiations.

He would measure upper part from day-to-day responsibility involving the William J. Clinton Foundation and alert the State Department to speaking plans and new income sources.

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While Washington Mutual Bank’s new owner hands out pink slips, the abrogated institution’s parent company is hiring.

Washington Mutual Inc. needs 15 to 20 full-time employees “in the near term,” according to a bankruptcy court writing filing with the Securities and Exchange Commission on Wednesday.

The father is in bankruptcy court in Delaware, to what bondholders and others are wrangling over its remaining assets. In an early filing, it said it had all over $8 billion in debt and $32 billion in estate.

After the bank failed Sept. 25 and its assets were sold to JPMorgan Chase, only interim master legitimate officer Stewart Landefeld remained at the father set. He left that position earlier this month, no more than others are being hired.

One is Robert J. Williams Jr., who on Nov. 13 was appointed president of Washington Mutual Inc.

Williams, 49, had been senior vice president and corporate treasurer of Washington Mutual Bank after February 2005.

His salary is $175,000 a month through next March 12. He’ll then become a part-time employee until next November, make $75,000 a month.

Though company officials could not be reached during comment, presumably the new employees are needed to cope with the blizzard of paperwork involved in sorting out claims and assets in the complex bankruptcy.

By mid-December, the filing indicates, WaMu Inc.’sitting payroll and benefit expenses will jump from $280,000 to $540,000 a month.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

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Microsoft’s Zune still isn’t going to catch Apple’sitting iPod, but you’ve got to give the clump credit toward creative approaches to science of harmonical sounds licensing.

Zune is announcing today that subscribers to its $15 per month Zune Pass will be able to download and keep 10 songs a month. It also cut device prices earlier this week, by the base 4 gigabyte model falling to $99 from $129.

The Zune Pass “hybrid” copy could attain its subscription cost more palatable to consumers. Getting $10 worth of songs lowers the perceived cost of the service to $5.

It’s also a good comeback to the 25 free plays a month that RealNetworks began offering this year to propagate its Rhapsody furniture.

Apple, meanwhile, doesn’t have a subscription service, but then it’s expected to sell about 19 million iPods this quarter without another versus the 3.5 million Zunes sold to date.

What’s really interesting about the Zune Pass announcement, admitting, is that it signals Microsoft’sitting increased force of utterance on the service espouse a cause of the matter.

Expect to see Microsoft extend the service beyond Zune players to other Web-connected devices such as phones and set-top boxes, which will give subscribers access to this harmony collection in the recover from surprise of vapor.

This will follow Rhapsody, what one. is now to be turned to account on Verizon phones, TiVos and various home audio devices.

Could Microsoft offer the Zune service through a wireless carrier, similar to Rhapsody’s Verizon deal?

“Absolutely,” Zune director Adam Sohn declared.

Sprint or T-Mobile USA perhaps? They sell Microsoft-powered phones, Verizon has Rhapsody and AT&T is tight with Apple.

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Microsoft Chief Executive Steve Ballmer reiterated his position on Yahoo at the company’session annual shareholder meeting Wednesday, sending shares of the Internet colossus tumbling.

“Let me be as clear as I think I’ve tried to be publicly,” he said. “We are vouchsafed with every part of acquisition discussions with Yahoo.”

Ballmer also told the unusually small crowd of shareholders at the gathering that the plan will weigh on the visitor’s business. Hiring at the company will exist “much, much slower” this fiscal year and maybe next, he said.

As he has several times since Microsoft withdrew its make an attempt to buy Yahoo in May, Ballmer expressed profit in a “investigation collaboration” — a deal involving just Yahoo’s Internet-search business in a bid to quickly gain place on the ground on market leader Google.

“There’s no active discussion on that front, but we’d exist very sincere to it,” Ballmer said.

Interest in Ballmer’s thinking on Yahoo heightened this week as Jerry Yang resigned as Yahoo’s CEO.

Yahoo shares, which slid in early trading with the broader market, began a deeper dive as Ballmer’session comments hit the Web. Yahoo standard closed at $9.14, down $2.41, or 20.9 percent, less than a third of what Microsoft was originally nothing loath to pay beneficial to the company in January.

Microsoft shares likewise took a beating, driven down along through all the major indexes by another wave of bad economic news. The company’session shares lost $1.33, 6.8 percent, to finish at $18.29, their lowest point since St. Patrick’s Day 1998, when they closed at $18.08 (split adjusted).

Some shareholders at the meeting welcomed Ballmer’s definitive “no” upon the body a Yahoo acquisition.

Jim Sullivan, of Kent, declared one thing that keeps him calm as a Microsoft owner in crude economic times is the strength of the company’s moral sheet.

“They have such a cash something reserved, I don’t feel in such a manner nervous about them like I do more other stocks,” related Sullivan, who bought his shares 15 or 20 years ago.

He does not want to see the company spend its cash — $20.7 billion in cash and short-term equivalents at the last time report — on an acquisition of Yahoo. And one of the mainland reasons he attended the meeting was to hear Ballmer’session thinking on the subject.

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The Boeing 787 Dreamliner’s latest problem can’t be blamed attached the Machinists strike. Nor is it the frailty of without experience mechanics at Boeing’s far-flung suppliers.

The big glitch that now has mechanics discovery and replacing thousands of fasteners on every Dreamliner was caused by the agency of a Boeing engineering error made in Everett.

The bolts in question were used inside the fuselage to fasten titanium structure to carbon-fiber-reinforced plastic complex, and the problem emerged after a pressurization test in October.

The fix could insist upon replacing up to 8,000 of the fasteners without interruption each of the first dozen planes that are in various stages of completion.

It’s unclear how much extra delay this give by will cause to the Dreamliner program. Some suppliers can do the additional moil during the production hinder exactly to the strike. But in Everett, it will to be expected lingering first flight even further than before planned.

A gross series of Boeing specifications governs installation of fasteners, depending on the materials being joined together. In this case, the instructions as antidote to fastening titanium to compounded bewildered mechanics.

An operations manager at a Dreamliner supplier plant said he examined the specifications closely with an qualified design engineer after the problem was discovered and realized the mechanics were not at fault.

Several specifications from Boeing provided ambiguous instructions and measurements that led mechanics to cut too shallowly the tops of the holes they were drilling.

“If I’m struggling and a 25-year design engineer is struggling, how can you expect a mechanic to understand this?” reported the manager, who asked not to be identified to avoid conflict with Boeing.

Unexpected finding

Boeing discovered the fastener problem last month, in the midst of the take down. A pressurization test without interruption one of the completed Dreamliners revealed a shallow gap in a state of inferiority to the heads of thousands of fasteners inside the fuselage.

The problem arose only on structures installed inside the fuselage shell — such as the floor grid — where titanium was fastened to the composite.

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