Finance & Business World

Federal aviation regulators slapped American Airlines on Thursday with the largest fine in history, charging that the carrier made thousands of unsafe flights.

The Federal Aviation Administration said it has "proposed" a $24.2 million civil penalty for American Airlines’ failure to properly inspect wire bundles in the wheel wells of its MD-80 aircraft. The incident snarled thousands of flights in 2008.

The airline, owned by AMR Corp., (AMR, Fortune 500) did not follow the guidelines in the so-called 2006 Airworthiness Directive, which was intended to prevent wires from shorting, which could cause a loss of power and possibly a fire, the FAA said.

The airline’s stock price is down 1.7%.

The FAA inspections resulted in the grounding of about 1,000 American Airlines flights in early April, 2008, after the FAA found that the airline did not properly inspect two of its airplanes.

As part of that inspection, the FAA determined that the airline operated 286 of its MD-80s on a total of 14,278 flights "while the aircraft were not in compliance with federal regulations cheap business cards."

FAA spokesman Lynn Lunsford said the fine is considered a proposal as a legal formality, because the airline has 30 days to respond and has the option of negotiating a smaller fine.

"There was never a flight safety issue," American Airlines spokesman Tim Smith told CNNMoney.com in an email.

"These events happened more than two years ago and we believe this action is unwarranted," he said. "We will challenge any proposed civil penalty. We are confident we have a strong case and the facts will bear this out."

Lunsford said that Southwest Airlines (LUV, Fortune 500) had previously been the recipient of the biggest FAA fine — of $10.2 million — which it was able to negotiate down to $7.5 million. 

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Brown Shoe Co. Inc. reported a second-quarter profit of $5.3 million, compared with a loss of $4.2 million in the prior-year period.

Net sales for the 13 weeks ended July 31 were $585.8 million, up nearly 15 percent from $511.6 million a year earlier.

Chairman and Chief Executive Ron Fromm said the company expects strong back-to-school sales, saying that one in 10 American families shop at Famous Footwear during this time.

"We plan to drive increased market share gains with a powerful assortment of brands and traffic-generating TV, print and digital-marketing campaigns," he said in Wednesday's earnings release easy to get unsecured personal loans. "Our portfolio of wholesale brands is equally poised for growth, as evidenced by our strong backlog for fall and holiday shipments."

St. Louis-based Brown Shoe Co. Inc. (NYSE: BWS) owns and markets shoes under the Naturalizer, LifeStride, Connie, Buster Brown and other brands; and operates the Famous Footwear and Naturalizer retail stores. Brown Shoe reported sales of $2.2 billion in 2009.

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Carson Solar Technologies has moved into new facilities, the result of growth in its business.

Company officials said the former construction company has moved into a space in Tempe that is three times the size of its former offices.

The new space, at 1849 W instant payday loans. Drake Drive, in Tempe, will have an open house from 4 to 8 p.m. Aug. 25.

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Top officials from National Fuel Gas Co. will be on Wall Street Wednesday, July 21 to ring the closing bell at the new York Stock Exchange.

The Williamsville-based energy company (NYSE: NFG) will celebrate 55 years as a listed company by ringing out the day’s trading at 4 p.m.

“The NYSE has long been a home to many of the world’s leading publicly traded companies and we are pleased to celebrate 55 years along side many of these respected businesses with a history as long as ours,” said a statement from CEO David Smith, who will lead the senior management team.

National Fuel was incorporated in 1902.

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As BP Plc’s costs to clean up the oil spill in the Gulf of Mexico rise to more than $3 billion, the company is asking partner Anadarko Petroleum Corp. to help foot the bill.

The London oil giant has so far billed The Woodlands-based Anadarko (NYSE: APC), which holds a 25 percent stake in the Macando well, for $272 million, according to the Associated Press. It also reportedly is charging Mitsui, which holds a 10 percent interest in the well, for $111 million.

In mid-June, Anadarko Chairman and Chief Executive Jim Hackett declared that the April 20 explosion on the Deepwater Horizon and subsequent oil spill was a preventable tragedy and “the direct result of BP’s reckless decisions and actions.”

IHe went on to say that Anadarko should not have to pay for BP’s failure to drill the well in a “good and workmanlike manner.”

Anadarko, according to AP, is evaluating the bill from BP and assessing its contractual remedies payday loan.

Anadarko, along with all the spill-related companies, has seen its stock plummet in the wake of the disaster. Shares closed on July 2 at $38.07, down sharply from $73.79 on April 20, the day of the explosion.

For its part, BP said on July 5 that the cost of the spill response to date now totals about $3.12 billion. A new ‘super skimmer’ is being tested in the Gulf but efforts have been hampered from rain and wind resulting largely from Hurricane Alex. To date, clean-up operations have recovered in total about approximately 673,497 barrels, or 23.5 million gallons, of oily liquid.

The Houston Business Journal is providing continuous coverage of the Gulf oil spill.

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Financial shares rallied Friday on relief that the new version of the Wall Street reform bill is less restrictive than had been expected, but the broader market was mixed at the end of a down week on Wall Street.

Dow Jones industrial average (INDU) lost 9 points or 0.1%. The S&P 500 (SPX) gained 3 points or 0.3% and the Nasdaq (COMP) composite gained 6 points or 0.3%.

Stocks seesawed in the morning after economic growth in the first quarter was revised lower. Initially, investors showed little reaction to the news that lawmakers in the House and the Senate finalized negotiations on the most sweeping financial reform since the New Deal. But as the session wore on, the tone improved and the rally in bank shares spread to the broader market.

However, markets turned mixed near the close and trading volume amped up amid the impact of the annual rebalancing of the the Russell indexes. They include the Russell 1000 index of the largest American companies and the Russell 200 index of smaller companies.

Banks, techs, drugmakers and energy shares were among the gainers on the day, but some of the consumer product names stumbled, leaving markets mixed on the session. Blackberry maker Research in Motion (RIMM) lost nearly 11% in very active trading after it reported a rise in fiscal first-quarter revenue and earnings that disappointed investors on the revenue side.

Stocks lost ground this week after a two-week advance, as economic worries resurfaced after a brief reprieve. The market has been firmly in "correction" mode - down at least 10% from the highs - for over a month now.

The recent attempt to erase those losses petered out this week amid worse-than-expected reports on housing, manufacturing and on Friday, GDP.

GDP: Economic growth in the first three months of the year progressed at a slower pace than originally reported, the government said Friday, with consumers spending less than originally thought.

GDP grew at a 2.7% annualized rate in the first quarter versus the previously reported 3%. Economists surveyed by Briefing.com thought growth would hold steady at 3%.

In other economic news, the University of Michigan’s final consumer sentiment index for June was revised up to 76 from the previous reading of 75.5. Economists thought it would hold steady, on average. The index stood at 73.6 in May.

Wall Street reform: After two weeks of negotiations following a year of work, lawmakers in Washington have combined two versions of a reform bill that will overhaul the financial system. The final bill won’t be passed for a few days payday loans.

Proposed in the wake of the financial market meltdown, the bill’s highlights include: the establishment of a consumer protection agency inside the Federal Reserve; mortgage help for the jobless; and the establishment of a council to look out for problems at major banks and throughout the financial system.

While most of the stock market was flat to lower, the financial sector rallied on relief that the part of the bill that regulates trading was not as strident as some had feared.

The government would be given the ability to regulate derivatives - complex securities that were used by speculators in a way that contributed to the collapse of the housing market. But the regulations are looser than initially proposed. Also, the government will be able to limit, but not stop, banks from making trades on their own accounts.

Financial shares rallied, with the KBW Bank (BKX) sector index adding 2.9%. Components Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Comerica (CMA) and PNC Financial Services Group (PNC, Fortune 500) were among the gainers.

Currency: The euro inched higher versus the dollar but remained well above the four-year low of $1.188 hit last week. The dollar was down 0.3% versus the yen. The direction of the euro and the state of global debt are expected to be in focus at this weekend’s G-20 meeting.

World markets: European markets slipped. Britain’s FTSE 100 lost 1%, Germany’s DAX gave back 0.7% and France’s CAC 40 fell 1%.

Asian markets slipped. Japan’s Nikkei fell 1.9%, Hong Kong’s Hang Seng fell 0.2% and China’s Shanghai Composite lost 0.5%.

Commodities: U.S. light crude oil for August delivery rose $2.11 to $78.62 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery gained $10.60 to $1,256.70 an ounce after closing at a record $1,258.30 last Friday.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.11% from 3.12% late Thursday. Treasury prices and yields move in opposite directions.

Market breadth: Market breadth was positive and volume was robust because of the rebalancing. On the New York Stock Exchange, winners beat losers seven to three on volume of 2.56 billion shares. On the Nasdaq, advancers topped decliners two to one on volume of 5.14 billion shares. 

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Faced with uncertain winds in U.S. defense spending, Boeing’s Hazelwood-based defense unit is venturing into far less traditional markets like the power grid and cybersecurity.

The aerospace company will continue to build fighter jets and other military aircraft. Boeing learned in May that it had secured another multi-year order of locally built F/A-18 fighter jets.

But earlier this year, Defense Secretary Robert Gates said he would urge President Barack Obama to veto any legislation that continues production of the "unnecessary" C-17 Globemaster transport plane. Last year, the Pentagon scaled back Army modernization and missile-defense programs in which Boeing was a major player.

"We absolutely want to stay in those platform businesses if you want to call it that," said Chris Raymond, Boeing Defense, Space & Security’s vice president of business development. "We want to stay in the rotorcraft, airborne battle management, fighters and strike. Those are obviously core business for us. We are always trying to extend that and refresh the products in that."

But the nation’s second-largest military contractor also wants to "diversify and expand" into other realms that include energy and cybersecurity, he said.

Last fall, Boeing won an $8.6 million grant from the U.S. Department of Energy to help develop an advanced "smart grid" prototype for optimizing regional power transmission. Boeing also was subrecipient on two other Department of Energy grants with partners Consolidated Edison of New York and Southern California Edison.

In all, the Department of Energy awarded $620 million in federal stimulus to 32 demonstration projects aimed at modernizing and fortifying the nation’s electrical grid.

Boeing Chairman Jim McNerney told shareholders last month that while the company plans to "maintain a large and stable business" providing programs and services to the U.S. military, the defense contractor also is actively pursuing other opportunities for growth.

In January, Boeing formally changed the name of its defense unit from Integrated Defense Systems to Boeing Defense, Space & Security. The move was part of a realignment aimed at capturing business in adjacent markets within the United States and abroad, officials said.

Boeing and other defense contractors are making a push into the emerging homeland security market as well.

Raymond said the line is going to blur between classic defense and homeland security functions.

"I think you’ll see the big defense companies kind of morphing to defense and security, or global security," he said . "And that covers more than just what we’ve thought of as defense."

Last month, for instance, a Lockheed Martin-led team began development of a Next Generation Identification system capability to help law enforcement agencies better search the FBI database of wanted criminals and terror suspects. Lockheed Martin has opened a NexGen Cyber Innovation and Technology Center in Gaithersburg, Md.

In addition to energy and cybersecurity, those markets include intelligence and logistics, company officials said.

Philip Finnegan, director of corporate analysis at Teal Group, said Boeing and Lockheed reflect a trend among defense contractors that are focusing on adjacencies. It makes all the more sense with defense budgets reaching a plateau, he added.

"This fits within an overall drive we have seen in Boeing to really work to broaden itself beyond its defense core," Finnegan said.

James Carafano, a military and homeland security expert at the Heritage Foundation, said Boeing’s moves also reflect a realistic response to the cyclical nature of U.S. defense spending. But it also reflects the expertise the company has developed managing sophisticated manufacturing efforts with far-flung supply chains.

"When you put together a modern airplane, it is an incredibly large, complex system," Carafano said. "I think Boeing thinks it is in the business of systems integration, and systems integration is something that cuts across a lot of sectors."

Raymond agreed.

"We always want to be a large-scale systems integrator," he said. "That is one of our core DNA."

Boeing’s capabilities to handle complex systems engineering jobs and to manage complex supply chains, he said, are largely why the company was awarded such major contracts as the Future Combat Systems, missile defense and the country’s secure border initiative.

Nonetheless, Future Combat Systems — a major Army modernization effort — was another major Boeing contract that was scaled back. Last June, the Pentagon ordered a major restructuring of the $160 billion Future Combat Systems program to a series of acquisition programs extending high-tech battlefield equipment to all combat brigades.

Boeing was the lead contractor for the modernization program along with Science Applications International Corp. of San Diego.

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Toyota brought us the Venza last year, now Honda has the Crosstour. At first blush the two seem like rivals in the spirit of Camry and Accord, the popular sedans that form the basis for the new pair. Both further blur lines already crisscrossed by sedans, coupes, sport utilities etc.

But Venza is more of a wagon than a sport utility, kind of the opposite of most crossovers. Crosstour comes across as more of an oddity, a high-riding midsize hatchback rather than a wagon or SUV.

And that iteration of one of the market's best midsize sedans left me a little disappointed. First, the swoopy hatchback design cuts into rear vision, especially with the big spoiler crossing the rear window. And it didn't draw the compliments like the Venza — shades of Pontiak Aztek. Second, although cargo room may be more versatile than the sedan's trunk, the design limits a major gain.

Beyond those complaints, the Crosstour is another shining example of Honda finesse. The powertrain combines a five-speed automatic transmission with a 3.5-liter, 271-horsepower V-6 engine for a smooth, responsive ride. Gas mileage tops out at 27 miles per gallon on the highway with front-drive models. That's a leap over traditional crossovers such as Honda Pilot, but lags Venza, which gets up to 29, but only when outfitted with its 4-cylincer plant.

Crosstour EX starts at $30,450 and includes more than just the basics, including a power moonroof, remote entry, rear wiper, dual climate control, power seats, cruise control, CD changer, MP3 jack, and compass.

Side airbags and curtains, stability and traction control, fog lamps, antilock brakes with assist feature, and tire-pressure monitor make a nice safety package along with perfect fives in government crash tests.

Leather seats and navigation (which includes needed help in the form of a backup camera) are among extras. It costs at least $34,800 to get into an all-wheel Crosstour, but that also includes an upgrade to the EX-L trim payday advance lender.

That long list of features along with Honda's knack for fit and finish provide for an upscale interior. Front buckets are ultra comfy and rear seats are thick and supportive, but do not recline. Legroom is super front and back. As with Venza, there is no third-row seating option.

Despite its size limitations, the cargo bay offers some thoughtful touches. Rear seats easily flip down, not only from flip-switches in the back seat, but also at the touch of a handle in the cargo bay itself. There also are tie downs and three storage bins under the carpeted floor. The floor also can be flipped over with the plastic side up in case you need to haul a bunch of muddy gear.

Both Honda and Toyota have a full range of choices that make sense for family hauling - from the utilitarian compact Fit and Element to SUVs CR-V and Pilot in Honda's case. Both carmakers are skilled at hitting buyer sweetspots amid a growing and evolving field of competitors. Crosstour is likely to appeal to buyers wanting something a little meatier than the Accord sedan, without going for the full-fledged SUV.

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The developers of Salpare Bay, the failed luxury condominium project on Hayden Island, expect to file for bankruptcy by June 4.

The bankruptcy plan, disclosed in a federal lawsuit against the lenders on the $100 million project, would occur in time to stop a sheriff’s auction of the property to satisfy a $4.4 million judgment won by builder J.E. Dunn Northwest Inc. for its work on the project in 2007.

Attorney Christine Kosydar, who has represented majority owner Michael DeFrees and minority owner George Killian, revealed plans to file for bankruptcy on or before June 4 in papers disclosing a conflict between the pair. Kosydar sought court permission to withdraw as Killian’s legal counsel because of the dispute.

The document did not disclose whether the bankruptcy petition would be filed under Chapter 7 (liquidation) or Chapter 11 (reorganization) of the U.S. Bankruptcy code.

DeFrees and Killian are seeking $390 million from 40 lenders who brought the project to a halt when they declined to fund a $63.6 million loan.

A bankruptcy petition would add another legal wrinkle to a vast case that already has spawned what’s thought to be the largest legal negligence case ever filed in Oregon. The 40 lenders have sued law firm Sussman Shank LLP in Multnomah County Circuit Court for $447 million, saying its counsel led them to decline to fund the loan and exposed them to liability to DeFrees and Killian.

Sussman Shank counters that it represented the one bank that is not part of the case.

The Multnomah County Sheriff’s Department auction, which covers both the condominium property and associated marina, is currently scheduled for 10 a.m. June 4 on the courthouse steps.

Also pending on the Salpare Bay calendar: U.S. District Court Judge Michael Hogan has scheduled a mediation session in the developer-lender cases for 9 a.m. June 2 in his chambers.

Salpare Bay, 449 N.E. Tomahawk Island Drive, offered buyers the chance to live next to the Columbia River in luxurious condominiums and first-class marina accommodations. The 204-unit project has languished since mid-2007.

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Consumer prices fell in April for the first time in 13 months, giving the Federal Reserve more room to keep interest rates at historic lows to aid the economy. That’s good news for borrowers, but not for savers.

Record-low rates help borrowers who qualify for loans and want to take on more debt. The prime lending rate, used to set rates on some credit cards and consumer loans, is at its lowest point in decades.

But low rates hurt savers. They’re especially hard for people on fixed incomes who earn scant returns on their savings.

The 0.1 percent decrease in overall prices last month was pulled down by gas prices, which are expected to drop further this summer.

Core inflation, which excludes volatile food and energy prices, was flat in April, according to the Labor Department report Wednesday. Over the past 12 months, core inflation has risen just 0.9 percent — the smallest increase in 44 years.

The recession in 2007 and 2008 has kept inflation so low that some economists worry about the possibility of deflation — a destabilizing period of falling prices and wages.

"With the unemployment rate so close to 10 percent, it is entirely understandable that the Fed wants to stick with its commitment to leave rates at near-zero," said Paul Ashworth, senior U.S. economist at Capital Economics.

Ashworth said he thought the Fed wouldn’t start raising rates until late next year — and potentially not until 2012.

Economists had expected overall prices and core prices to edge up 0.1 percent in April. The drop in overall prices was the first decline since a similar dip in March 2009.

Energy prices fell 1.4 percent, the biggest one-month decline since March 2009. Gasoline prices dropped 2.4 percent. Analysts said they expect further declines in coming months as crude oil prices are down nearly 20 percent since April.

Food costs rose 0.2 percent, the same increase posted in March. Economists had expected a bigger increase because of a winter freeze on Florida vegetable and citrus crops.

Clothing costs dropped by 0.7 percent in April. The cost of new vehicles was unchanged. Airline tickets rose by 2.2 percent, one of the few areas to show price pressures last month.

Joel Naroff, president of Naroff Economic Advisors, said stable prices had allowed consumers to spend more freely despite slow growth in income and high unemployment. He said most businesses were "dealing with a sluggish economy and that means they have very little pricing power."

Inflation at such low levels raises concerns of deflation. But most economists believe that threat remains remote. The overall economy has begun growing again, and hiring is starting to pick up.

The U.S. has not had to battle deflation since the 1930s.

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