(Headlines - scroll down for full stories)
1. AT&T Compromise May Get Merger Approved
2. Goodyear Contract 'Bittersweet' for Some Employees
3. Comair Pilots OK Deal to Avert Strike
4. U.S. Treasuries Continue Decline
1. AT&T Concessions May Get BellSouth Merger Approved
While much of Washington enjoyed a holiday break, lawyers for AT&T Inc. and the
government worked marathon hours to forge an agreement that would allow the
company to complete its $85 billion purchase of BellSouth Corp.
The proposed deal could lead to the largest telecommunications merger in U.S.
history.
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AT&T on Thursday night put forth what is expected to be its last and best offer,
and it appeared it was good enough to lead to a vote on the merger by the
Federal Communications Commission as early as Friday.
AT&T has offered concessions beyond what it had promised in October, including a
significant pledge to observe standards regarding network neutrality —
basically, equal treatment for all Internet traffic. This issue appeared to be
the biggest roadblock to a deal.
Among the other concessions were an offer of affordable stand-alone digital
subscriber line service and a pledge to "repatriate" 3,000 jobs that had been
outsourced by BellSouth.
Final approval requires a vote of the commissioners. An open meeting is not
required; rules allow them to vote via computer.
AT&T offered the concessions after a little more than a week of marathon
negotiations with lawyers who work for the commission's two Democrats, Michael
Copps and Jonathan Adelstein, documents show.
Consumer advocates praised the compromise.
Gene Kimmelman, vice president of federal and international affairs for
Consumers Union, who has worked closely with the Democrats, said AT&T's new
concessions are "an enormous improvement from where we were a month ago."
Ben Scott, legislative director for Free Press, a reform group that has fought
the merger, said the network neutrality provision was a "big step forward for
the supporters of an open Internet."
The agreement came together 10 days after Republican Commissioner Robert
McDowell announced he would not vote on the deal, despite being authorized to do
so by the FCC's general counsel.
McDowell had decided to recuse himself because of his former position as a
lobbyist for Comptel, a trade organization that opposes the merger.
FCC Chairman Kevin Martin, a Republican, who supported approval of the merger
without conditions, had bet that McDowell would vote for the deal following the
legal opinion and break a 2-2 partisan deadlock.
But with McDowell's firm declaration that he would not vote, the pressure
shifted to AT&T, which had hoped to close the transaction by the end of the
year. The development put the two Democrats in a much stronger position.
In an effort to get the merger approved, AT&T submitted a set of concessions on
Oct. 13, but the Democrats rejected them as insufficient.
AT&T's letter of commitment, written by Robert W. Quinn Jr., the company's
senior vice president for regulatory affairs, noted that the new concessions
were "significantly more extensive than those submitted on Oct. 13."
Among the promises made by the company:
- An offer of stand-alone, high-speed Internet service to customers in its service
area for $19.95 per month for a total of 30 months. The "naked DSL (digital
subscriber line)" offer would allow those who live in AT&T and BellSouth's
service areas to sign up for fast Internet access without being required to buy
a package of other services.
- A greater commitment to network neutrality, or nondiscrimination involving
Internet traffic. AT&T said it would "maintain a neutral network and neutral
routing in its wireline broadband Internet access service" for two years.
- To freeze rates for "special access" customers, usually competitors and large
businesses that pay to connect directly to a regional phone company's central
office via a dedicated fiber optic line, for 48 months.
- To "assign and/or transfer to an unaffiliated third party" all of its 2.5 GHZ
spectrum currently licensed to BellSouth within one year of the merger closing
date.
- To "repatriate" 3,000 jobs that were outsourced by BellSouth outside the U.S.
by Dec. 31, 2008, with at least 200 of them to be located in New Orleans.
The Justice Department on Oct. 11 approved creation of the new
telecommunications giant without conditions.
The combination of San Antonio-based AT&T and Atlanta-based BellSouth would have
operations in 22 states. AT&T estimates that about 10,000 jobs would be phased
out over three years.
© 2006 Associated Press.
Editor's Note:
2. New Goodyear Contract 'Bittersweet' for Some Employees
Some Goodyear Tire & Rubber Co. workers said their new contract with the world's
third-largest tire maker is a bittersweet ending to a 12-week strike.
About 10,000 out of 14,000 striking United Steelworkers members from 12 Goodyear
plants in 10 states voted Thursday night on the three-year agreement, which
includes plans to close a Texas tire factory but creates a $1 billion
health-care fund for retirees.
The contract was approved by all locals and by the overall membership by a
two-to-one margin, the union said early Friday. Exact totals were not released.
The contract needed to be approved by a majority of the locals — seven out of 12
— plus a majority of the voters.
The vote means the strike that began Oct. 5 is officially over. Strikers plan to
return to work beginning Tuesday, the union said.
"They're ecstatic to get back to work and to get caught up on some financial
obligations," said Darryl Jackson, president of the union local in
Fayetteville, N.C., where membership voted 1361-95 to approve the contract.
"It took a strike, but we achieved a fair and equitable contract that protects
quality health care for active and retired members," USW executive vice
president Ron Hoover said in a statement. "And by winning major capital
investment expenditures, it secures our jobs for the future."
Workers at four Goodyear plants in Ontario, where about 400 union members are
striking four plants, planned to vote Thursday and Friday on a separate company
proposal.
The contract with U.S. workers would allow the tire producer to close a plant in
Tyler, Texas, but not immediately. It provides for a one-year transition period
in which the workers will have the opportunity to take advantage of retirement
buyouts. The plant employs 1,100 workers who make unprofitable wholesale private
label tires.
"It's a bittersweet outcome," said Kevin Johnsen, a union contract
coordinator. "We wanted to win Tyler protected status like the other plants,
but we only got it for 2007."
The union in Tyler also approved the deal and took down its picket line Thursday
night, said Harold Sweat, vice president of USW Local 746L.
Another key issue during the strike had been over a company proposed health care
fund for retirees.
Goodyear ultimately agreed to put $1 billion into the fund for retired union
workers' medical benefits, higher than the company's previous $660 million offer
but less than the union's call for roughly double that amount.
The company said the pact will help it significantly reduce its costs.
"The end result is Goodyear will be a stronger company, a stronger employer and
a stronger overall global competitor," chairman and CEO Robert Keegan said.
Before the vote, some union members at halls across the country expressed
concern about the proposal, saying they feared the retiree health-care fund was
underfunded and that they questioned job security. But many of them said they
believed the pact was the best deal they could get.
Terry Huddleston, a 14-year Goodyear worker in Akron, said he voted for the
agreement but with some reservations, saying he believes the rank-and-file have
had to sacrifice too often.
"It's unfortunate," Huddleston said. "I love all these guys. God bless them.
We've managed to stick it out for three months, but a lot of families are
suffering."
The new contract covers plants in Akron; St. Marys, Ohio; Marysville, Ohio;
Gadsden, Ala.; Tonawanda, N.Y.; Lincoln, Neb.; Topeka, Kan.; Fayetteville, N.C.;
Danville, Va.; Tyler, Texas; Sun Prairie, Wis., and Union City, Tenn.
During the strike, Goodyear made tires at some of its North American plants with
nonunion and temporary workers as well as some managers. The company counted on
production at its international plants to help supply North American customers,
but some dealers said there was a shortage of some specialty Goodyear tires.
Goodyear has about 80,000 employees and makes tires, engineered rubber products
and chemicals in 29 countries
© 2006 Associated Press.
Editor's Note:
3. Comair Pilots OK Deal to Avert Strike
Passengers booked on Comair flights won't have to worry about a pilots strike
interrupting their air travel this holiday weekend.
The Delta Air Lines Inc. subsidiary and leaders of the Air Line Pilots
Association that represents Comair's 1,500 pilots have agreed to postpone the
deadline for reaching a consensual wage-cutting deal.
Comair pilots had authorized union leaders to call a strike if the airline
throws out their contract and imposes wage cuts and other concessions on them.
The airline had planned to do that on Saturday if a deal wasn't reached by then
on pilot concessions the airline says it must have to emerge from bankruptcy.
A lawyer for Comair on Thursday had asked a federal bankruptcy judge in New York
to delay making a decision about the company's request to block pilots from
striking pending a vote by union leaders Thursday night on whether to approve a
deferral of the deadline.
Union leaders agreed late Thursday night to a deferral until Feb. 2, and both
sides will continue to negotiate in an effort to reach a consensual deal. The
agreement also leaves pilot pay at its current level during the deferral period.
"It's good news for the traveling public," said Denke. "Our focus hasn't
changed. We are still committed to reaching a fair and consensual deal.
Comair spokeswoman Kate Marx said the company agreed to the deferral as a way to
continue working toward a consensual labor agreement. The airline's pilots fly
795 daily flights to about 100 cities throughout North America.
Denke said no schedule for the continuing negotiations had been determined as of
Thursday night.
Comair had said it would impose $15.8 million in annual concessions Saturday if
a deal was not reached by then and that it was under time pressure to do so
because part of its contract requires that beginning Monday, it would be forced
to pay an additional $8 million a year to pilots. Comair is seeking savings of
$70 million a year, as it works toward exiting bankruptcy along with
Atlanta-based Delta Air Lines.
Comair's plan also includes concessions from its flight attendants and
mechanics.
The Erlanger, Ky.-based Comair, located near the Cincinnati/Northern Kentucky
International Airport, received permission from Hardin to impose the wage cuts
and changes in work rules on its pilots after the two sides were unable to reach
agreement in earlier negotiations.
Comair previously had an agreement with its pilots for $17.3 million in annual
cuts over the next four years that was contingent on Comair getting a certain
level of savings from its flight attendants and mechanics union.
Because the flight attendants approved a deal last month to cut annual costs by
$7.9 million, $1 million less than originally required, the airline had to
negotiate new deals with the machinists and pilots. The machinists agreed to a
modified deal, but the pilots did not.
© 2006 Associated Press.
Editor's Note:
4. U.S. Treasuries Continue Decline; 10-Year Yields Continue Ascent
News that the economy is recovering after two quarters of slowing growth is
triggering U.S. Treasury notes to head for their fourth straight weekly decline.
Ten-year yields have increased almost a quarter-percentage point this month,
reported Bloomberg.com, as traders pared their expectations for interest-rate
cuts by the Federal Reserve.
Stronger-than-expected reports on home sales, consumer confidence and
manufacturing over the past two days pushed the yield to a seven-week high
yesterday.
According to Cantor Fitzgerald LP, the benchmark 10-year note yields rose almost
2 basis points to 4.70 percent at 9:29 a.m. in New York. The price of the 4 ⅝
percent security due in November 2016 dropped about ¼ point, or $2.50 per $1,000
face amount, to 99 11/32 it's down more than 2 points over the past four weeks.
That marks the first time 10-year yields have climbed for four consecutive weeks
since mid-2005, when the central bank was in the midst of a 2-year series of
rate increases. Treasuries, meanwhile, fell in each of the six weeks ending Aug.
5, 2005.
Hiroyuki Yamada, who helps manage $1.19 billion at Daiwa SB Investments Ltd. in
Tokyo, offered that, "The market has overestimated the slowdown in the U.S.
economy and the chances of a Fed rate cut next year. With the economy still
showing signs of strength, we are going to see yields rise from here."
He added that the 10-year yield may rise to 5 percent in the next three months.
With some investors opining the drop presents a buying opportunity,
Bloomberg.com said that may "temper" declines in Treasuries.
In fact, Masayuki Yoshihara, who helps manage the equivalent of $26 billion in
non-Japanese bonds at Sumitomo Life Insurance Co. in Tokyo said "the 10-year
yield may drop to 4.25 percent in the next month."
He added that the company plans to buy some Treasuries "in the new year.
Inflation is not accelerating, and we see the yields as attractive."
Editor's Note:
Editor's Notes:
