other recent stories II

New CTA cars prioritize capacity, not service, experts say

April 16, 2010

Two Chicago transportation experts expressed doubts about the seating configurations in the new Chicago Transit Authority rail cars unveiled Thursday during a press conference.

The center-facing seats are seen as less comfortable for passengers, and may make the CTA less competitive as a mode of transportation.

“When you’re looking at the viewpoint of competing for riders, then that’s not going to achieve it. Purely from a service standpoint, having the new cars with the technology is good, that’s all positive. The main negative is from the overall user experience,” said Professor Hani Mahmassani, director of the Northwestern University Transportation Center.

The new train car model retires the current seat configuration in favor of space-saving aisle-facing seats. The new design reduces the number of seats by about 17 percent.

“The density in our system isn’t so great that we should write off getting a seat. I’m not talking about the Red Line at rush hour, I’m talking about the other 90 percent of the system,” said Joseph Schwieterman, director of DePaul University’s Chaddick Institute for Metropolitan Development.

The prototypes, which will start test runs on the Red Line next week, have four fold-up and 34 aisle-facing seats, creating a wider center aisle and more space for bicycles, strollers and luggage at the expense of up to eight fewer seats per car. Overall, the new model increases maximum passenger capacity to 123 passengers.

“I think as other modes of transportation become more comfortable, it’s a shame that the CTA is taking a step backwards with fewer seats. It reinforces the notion that transit is inherently uncomfortable,” Schwieterman said.

In the Chicago area, the average commute by train is approximately 45 minutes, including walk time, while in a car it’s about 25 minutes, according to experts.

The seating configuration was at the request of the CTA, according to the manufacturer, Montreal-based Bombardier Transportation Mass Transit Corp.

“The end result is a wider aisle, more room to maneuver. It’s easier to get on and off,” said Maryanne Roberts, spokeswoman for Bombardier.

The new fleet, comprising 406 rail cars and a $603.6 million investment, is sorely needed. The new models will replace cars that have been in service for up to 41 years and have outdated, inefficient propulsion and braking systems. The recommended lifespan for a rail car is 25 years.

The new design adds six inches to the narrowest point of center aisles, and will have passenger support poles and hard straps plus two spaces for wheelchairs. The prototypes include several new passenger safety features, a more efficient braking system, an improved communication system and modernized climate regulation.

New safety features include seven networked security cameras per car, an intercom enabling the rail operator to see and communicate with passengers, and an emergency communication system. Lighted station indicator maps and destination signs will also be on the interior and exterior of the new 5000 series model.

Navistar optimistic for 2010 earnings

April 08, 2010

Commercial truck and engine manufacturer Navistar International Corp. Thursday increased earnings guidance for 2010, raising its net income forecast to between $198 million to $234 million, or $2.75 to $3.25 per diluted share.

The improved outlook was attributed to a stronger economic climate, an increase in military sales and improved margins in the truck and parts business. Previous earnings guidance for the fiscal year ending Oct. 30 was $1.75 to $2.25.

Navistar, based in Warrenville, anticipates its defense segment revenues to land in the range of $2.6 billion to $2.8 billion, with confirmed orders worth $2 billion. Military sales last year totaled $2.8 billion.

Analysts responded positively, if cautiously, to the news. Chicago-based Barrington Research Associates Inc. analyst Walter Liptak highlighted the company’s potential for an early rebound as an advantage over competitors, and identified Navistar as a solid company for longer-term investment.

“The military sales is a positive for this year, but the thing that will really help NAV is the new 2010 trucks which should help the company gain market share,” Liptak wrote in an email.

Navistar Chairman and CEO Daniel Ustian told analysts that the revenues from the military orders would fall primarily into the third quarter, and that the profitability outlook for the second quarter was “right on the line.” Non-operational items, not margin on existing orders, will swing the second quarter results, Ustian said.

Liptak decreased his second-quarter earnings estimates to a penny from 20 cents, but increased third-quarter estimates to $1.52 from $1.33.

Commercial truck industry sales dropped sharply during the economic slowdown, bringing Navistar’s retail truck sales in 2009 to its lowest point in 47 years.

Navistar’s stock increased 94 cents, or 2 percent, to close at $48.00 Thursday.

other recent stories

UAL reports higher sales, narrowed losses

April 27, 2010

UAL Corp. reported improved first-quarter results with a narrower loss driven by an uptick in revenue. Earnings beat the Wall Street consensus estimate by a considerable margin but the stock dropped 8.3 percent.

UAL lost $82 million, or 49 cents per share, an improvement from the prior-year loss of $382 million, or $2.64 per share, even as volatile fuel expenses increased nearly 20 percent.

Analysts surveyed by Yahoo Finance were expecting a loss of 77 cents in the quarter ended March 31. Chicago-based UAL, the holding company for United Airlines Inc., reported a revenue increase of nearly 15 percent to $4.24 billion from $3.69 billion the prior year.

UAL executives said the airline is still has a long way to go. “There is much more work to do and much more potential to be realized,” said United's Executive Vice President John Tague.

The company announced Friday a change in its frequent flier mileage revenue calculation. Analysts were supportive of the change in accounting practice, which lifted revenue per available seat mile – an industry metric measuring demand—by an estimated 1.5 percent to 2 percent

Hudson Holding Corp. analyst Daniel McKenzie raised his full-year earnings estimate to $3.20 per share from $2.30 based on the accounting change.

Analysts’ reactions ranged from tentative to positive about the quarter.

“We believe fundamentals are very solid,” wrote Gary Chase, an analyst with Barclays Bank PLC, in a research note. He raised his earnings estimate for the year to $2.55 from $1.40 and the target stock price to $30 from $25.

UBS Securities LLC analyst Kevin Crissey maintained his 2010 target price of $30 and full-year earnings per share forecast of $2.30. He wrote in a note that “compared to our model, revenue and costs were in-line to slightly worse.”

United executives expressed cautious optimism about the quarter during a conference call with analysts, referencing signs of recovering customer demand.

CEO Glenn Tilton said the company was “encouraged to see early recovery” in business passenger revenues. He also repeatedly mentioned United’s position among its competitors, adding the company posted the “best net margin of the five major U.S. carriers.”

Despite repeated attempts by analysts to address United’s merger talks with Continental Airlines, executives declined to comment during the conference call.

United stock closed Tuesday at $20.51, down $1.85 or 8.3 percent.

Cautious optimism for Boeing in 2010

April 21, 2010

Boeing Co., a leading aerospace manufacturer, reported decreased earnings Wednesday based on continuing soft sales in its commercial aircraft segment, but beat analysts’ expectations by 6 cents. Its stock rose 3.9 percent.

First-quarter earnings for the Chicago-based company fell 14.9 percent to $519 million, or 70 cents per diluted share, down from $610 million, or 87 cents per diluted share, last year. Analysts surveyed by Yahoo! Finance were expecting earnings of 64 cents.

Earnings reflected a 20-cent per share charge related to the recent healthcare legislation.

Boeing’s revenue for the quarter ended March 31, decreased 8 percent to $15.2 billion from $16.5 billion in 2009.

Boeing decreased its earnings guidance for the rest of the year to between $3.50 and $3.80 from its previous forecast of $3.70 to $4.00 based on healthcare costs. The $64 billion to $66 billion revenue forecast for 2010 was attributed to lowered aircraft production rates and reduced military spending.

“We are pleased with our first-quarter performance but recognize there is a lot of work to be done this year across both of our businesses,” said Boeing President James Bell during a call with analysts.

The company’s commercial airplanes segment saw an upswing in profit margin but decreased revenues, which dropped 13 percent to $7.47 billion from the same quarter last year. Boeing attributed lower revenues to fewer 747 airplane deliveries and issues with its seat supplier. Even so, margins for the commercial unit increased to 9.1 percent of sales from 4.9 percent during the first quarter of 2009. The company cited “strong operating performance” as the reason for the increase.

Boeing’s other business sector – defense, space and security – also saw a modest decrease in revenues over the previous year, shrinking 1 percent to $7.61 billion. The decline was driven primarily by lower volume in its network and space systems division. Margins decreased to 8.7 percent of revenue from 9.2 percent last year.

Chairman and CEO Jim McNerney indicated that the U.S. Department of Defense and other military agencies continue to face significant budget pressures.

Boeing’s business volume is split between its commercial and defense segments. Despite some shrinkage in its military revenue forecasts and slower sales on the commercial side, Boeing will continue to invest in program development for the rest of the year. R&D spending is forecast to rise to between $3.9 billion and $4.1 billion. Operating cash flow is expected to be zero for the year, reflecting a pension contribution of less than $100 million and a buildup of inventory.

Analysts are supportive of Boeing’s significant capital expenditures but are cautious about program development costs. A new assembly line for 787s in South Carolina, was an expected investment with the bulk of the costs landing in 2010.

“Boeing has significant execution risk related to its development programs, both in its commercial and military businesses,” wrote UBS Securities LLC analyst David Strauss in a research note. Strauss maintained his “neutral” rating with earnings estimates of $3.80 for the year, on the high end of the company’s guidance.

“We believe it is a positive sign that R&D guidance remains unchanged for the year,” wrote Stifel Nicolaus & Co. Inc. analyst Troy Lahr in a research note.

The company expects R&D spending to drop in fiscal 2011.

Boeing stock closed at $74.16 on Wednesday, up $2.75 per share, or 3.9 percent.

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or really, just one person...

the url for medill's new service is: http://news.medill.northwestern.edu/chicago/

this story is on the front page now, but front pages get changed just about daily. the best way to find business writing (which is frequently too boring to be included on the front page) is to click on the "business" link at the bottom of the page.

to find my stuff, i type my name into the search box.

believe me, we know how ghetto and user-unfriendly our website is. everyone is embarrassed by it, especially the knight scholars, who could easily re-build the front end in a day if someone would let them. our CMS is also off the hook and involves pounding flax into paper and making ink out of crushed beetles.

keep in mind that we write to a local audience, so everything is localized unless it's a story involving news in chicago or illinois. i've become the queen of graphs and the consultant extraordinaire in the newsroom for quick excel graphs that look terrible (but are accurate). we get extra points (literally) for graphs that we make, so i - being of reasonable intelligence - always include a graph or image with my stories. it basically doubles the points for my stories, enabling me to halve the number of stories i actually need to write for the course.

here's my story from thursday:

Unemployment claims drop, economy still weak

April 29, 2010

Advance initial claims for unemployment insurance dropped to 448,000 in the week ended April 24, according to a report released Thursday by the U.S. Department of Labor. That was down 11,000 from a revised figure of 459,000 the previous week.

Economists were expecting 445,000 claims, according to Yahoo Finance.

“Any time it goes down is good news,” said Michael Miller, associate professor of economics at DePaul University in Chicago.

Despite the decrease and other early indications of a stabilizing American economy, local experts say that the country is still in recession. The four-week moving average of initial claims rose by 1,500 to 462,500, an increase from the prior week’s average. The moving average has climbed for the past several weeks.

In Illinois, the four-week average decreased by 228 claims compared with the prior week. The four-week number paints a more accurate picture, and shows that last week’s claims are “in essence relatively flat, and down significantly from a year ago,” said Richard Kaye, an economist with the Illinois Department of Employment Security. Compared with the same period a year ago, new claims are down 41 percent, or 9,320 claims.

Illinois had fewer layoffs in the construction and service industries, according to the report.

“Job loss is slowing down, but you still have a pretty terrible labor market. That’s certainly true for Illinois,” said Bob Bruno, a professor at University of Illinois at Chicago’s School of Labor and Employment Relations. “The average duration on unemployment is still terribly high. Illinois is in that group of states that has to keep extending unemployment benefits.”

During a robust economic phase, initial unemployment claims can number from 325,000 to 400,000, according to Miller.

“While moving in the right direction, we’re still at the level of claims in the middle of recession numbers. We still have a long way to go,” Miller said. “We were worse for so long in the 600-range.”

In March, more than 44 percent of the nation’s unemployed had been jobless for 27 or more weeks, according to the Bureau of Labor Statistics. The March unemployment rate in Illinois was 11.7 percent, compared with the national average of 10.2 percent.

The four-week average may have been negatively skewed due to the timing of the Easter holiday, according to local experts.

The Dow Jones industrial average climbed 122 points Thursday.