News this morning includes US Airways and American talking merger, updates to the ongoing saga of Boeing's Dreamliner, potential evidence of misdeeds at JPMorgan, floating-rate Treasury notes, management buyouts at FedEx, a diesel Chevy Cruze coming to America and earnings from News Corp. and Visa.
US Airways Group
US Airways Group (LCC) and AMR Corp., the parent company of American Airlines, are working out the final details of a merger agreement, The New York Times reported late Wednesday. The combination would create the world's largest airline with a market capitalization of more than $10 billion. The plan involves an all-stock deal that would also serve as a reorganization plan that would bring American out of Chapter 11. Doug Parker, the CEO of US Airways, is being discussed as the CEO of the combined company, while Tom Horton, the CEO of AMR, could become either the non-executive chairman or executive chairman.
United (UAL) has dropped Boeing's (BA) 787 Dreamliner from its schedule for the rest of February. The Dreamliner has been grounded by regulators in a number of countries after a series of battery incidents. Boeing is reportedly working on changes to the planes' batteries and the FAA has agreed to allow a one-time flight of a 787 from Forth Worth, Texas to Everett Washington on Thursday.
E-mails and interviews with employees at JPMorgan (JPM) show that executives at the bank made changes to mortgage documents to make the underlying loans appear to be of higher quality before the loans were bundled into securities and sold to investors, according to documents filed in a federal court in Manhattan. The documents were filed in connection with a lawsuit brought by Dexia, a Belgian-French bank that suffered significant losses after some of its mortgage investments went bad. The suit contends that JPMorgan as well as Washington Mutual and Bear Stearns, which JP Morgan acquired during the financial crisis, ignored quality controls and hid issues with loans in order to boost profits.
The Wall Street Journal reported late Thursday that the Treasury Department plans to issue floating-rate notes over the next year. The government will first have to determine how to set the rates and how often they will reset. Selecting a benchmark that would determine the note's rate could be a difficult process given the ongoing investigations into rigging of the LIBOR by various banks.
News Corp. (NWSA) reported adjusted earnings of 44 cents per share on revenue of $9.43 billion for the most-recent quarter, compared to a mean analyst estimate for 43 cents per share on revenue of $9.26 billion. The company predicted that operating income for the fiscal year that ends in June would grow by "mid- to high single digit" percentages, compared to a previous forecast for "high-single- to low double-digit" gains the company forecast in November.
FedEx (FDX) announced Wednesday that more than 10 percent of its U.S.-based executives will leave the company under the terms of a voluntary buyout plan. The company said the departures will occur in stages through May 2014. The company did not say how many employees will be impacted.
General Motors (GM) brand Chevrolet is planning to bring a diesel-powered version of its Chevy Cruze to the U.S. The car, which is already sold in Europe, will make its U.S. debut at the Chicago Auto Show on Thursday. The company plans to tout the diesel version of Cruze on both performance and gas mileage.
Visa (V) reported earnings of $1.93 per share for its first-fiscal quarter, or $1.82 on an adjusted basis. Analysts had expected $1.79 per share. Purchase volumes rose to $1.1 trillion during the quarter.