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NYT > World Business
Europe Fails to Endorse Milk and Meat From Clones
Thu, 24 Jul 2008 20:04:39 -0000
Europe’s Food Safety Authority pulled back from giving milk and meat from cloned animals a clean bill of health, reducing the chances such products will reach stores soon.
Credit Suisse Earnings Fall 62% but Top Expectations
Thu, 24 Jul 2008 15:21:17 -0000
Credit Suisse posted a smaller-than-expected fall in earnings as it managed more cash for the world’s wealthy and its investment banking unit returned to profit.
New York Sues UBS for Securities Fraud
Thu, 24 Jul 2008 20:26:12 -0000
New York attorney general Andrew Cuomo announced a case against Swiss banking giant UBS over its conduct in the auction-rate securities market.
Warnings From Daimler and Renault
Thu, 24 Jul 2008 15:21:17 -0000
In another sign of stress for automakers, Daimler and Renault reduced their outlooks in the face of higher steel and oil prices and an economic slowdown.
Kremlin Rules: An Investment Gets Trapped in Kremlin’s Vise
Thu, 24 Jul 2008 12:32:12 -0000
The fall of one of Russia’s most prominent foreign investors points to the official corruption that afflicts the country.
Oil Survey Says Arctic Has Riches
Thu, 24 Jul 2008 15:26:12 -0000
The Arctic may contain as much as a fifth of the world’s yet to-be-discovered oil and natural gas reserves, according to a new U.S. Geological Survey forecast.
Portfolio.com: Business Travel
Table for One: Barcelona
Thu, 24 Jul 2008 04:00:00 -0000
Thanks to facilities built for the 1992 Olympics and burgeoning international investment (it's up 26 percent this year), Spain's cultural capital is giving Madrid a run for its money as the country's top business destination. And thanks to chef Ferran Adrià, it challenges Paris as global culinary hub. Love foamed beetroot or hate it, it's difficult to deny that Adrià fomented a food revolution by marrying science and haute cuisine. His eatery, El Bulli, is two hours outside the city, and while his influence can be seen from Australia to Chicago, it may be most obvious in downtown Barcelona. Even visitors who can't squeeze into Adrià's culinary temple can experience experimental fare—but they can also turn to far more conservative cuisine. Seafood is the centerpiece of most meals here, and local shellfish plays a leading role in the city's cuisine. Tapas are also widespread, even at more formal restaurants. That's a boon for solo travelers, who can choose from a huge range of small dishes (razor clams and olives are popular), washing them down with beer, vermouth, or cava produced in the nearby Penedès region. These light meals are served at all hours, which is helpful in a country where eating out is a form of nightlife. Most restaurants don't open until 8 p.m.; venture in before 9 p.m. and it's likely to be you and the waiters. Here, a half-dozen great places to dine alone, whether early or late. Ciutat Vella: Commerç 24 C/Commerç 24 +34 93 319 21 02 Solo diners eat here for the same reason they might go alone to a museum: to enjoy the artwork undisturbed. Carlos Abellán was a line chef at El Bulli before starting his own restaurant, and Adrià's influence is visible down to Abellán's trademark "Kinder egg," which arrives foaming with truffle and potato. The open kitchen is brightly lit so diners can watch the cooks wield syringes and aerosol cans. Minimum order is three tapas, but most guests order the tasting menu of 10 small courses. The waitstaff gravely explains the contents of each dish—usually not terribly obvious—and enforces the strict non-smoking policy. Dress: Business/business casual Prices: Expensive Reservations: Not necessary for the bar; otherwise recommended Barceloneta: Agua Passeig Marìtim 30 +34 93 225 12 72 Terraced restaurants overlooking Barceloneta seem a logical place to find outstanding seafood, but many are tourist traps serving sad, soggy paella. Agua is an exception and locals know it, so make a reservation if you plan to sit outside. The view of a rocky promontory is a big draw, but Mediterranean dishes like monkfish and clam stew or salmon tartare with leeks run a close second. The jamón ibérico on toast is worth trying if only because the specialty ham is so hard to obtain abroad. Dress: Business/business casual Prices: Moderate Reservations: Recommended for the terrace Barceloneta: 7 Portes Passeig Isabel II 14 +34 93 319 30 33 "1 p.m. to 1 a.m., uninterrupted" is written across the front door of this restaurant, the oldest in Barcelona. While it is among the best fish joints, 7 Portes does well to advertise its most salient feature in a city where it is gauche and nigh impossible to eat early. Popular "rich man's paella," is so dubbed because the chef has shelled the lobster, mussels, and clams. The dining rooms are divided into smoking and non-smoking, which breaks down into locals and visitors, pleasure and business, respectively. Famous guests have included Pedro Almodóvar, Salvador Dalí, and Orson Welles. Dress: Casual Prices: Moderate to expensive Reservations: During peak hours Ciutat Vella: Ca L'Isidre C/Les Flors 12 +34 93 441 11 39 Ca L'Isidre is the grand dame of Barcelona cuisine, serving Catalan favorites like morcilla (blood sausage) and lamb brains in black butter as well as less advanced options. The menu changes daily, depending on what the chef finds in La Boqueria, Ciutat Vella's iconic market. The stately restaurant has only 50 seats, and solo diners are tucked into a nook at the front. (The restaurant has 50 seats, the nook four.) Service is highly professional, down to the ritual of cutting and lighting the after-dinner cigar. El Raval may have been a more salubrious part of town when the restaurant opened in 1970; these days it is wise to take a taxi. Dress: Fashionable Prices: Expensive Reservations: Recommended Montjuïc: Oleum Parc de Montjïuc, Palau Nacional +34 93 289 06 79 Located in the National Art Museum of Catalunya, this three-year-old restaurant has created more buzz for the institution than its Romanesque collection. It has soaring multicolored marble walls, and an angled overhead mirror reflects the stunning hilltop view back at the well-heeled lunchers (dinner is by prearrangement for groups only). The food is an upscale version of menu del día, prescribed by Franco to ensure a filling midday meal with wine for workers. Along with a stray foam or two, the English-language menu sports some charming clunkers like "cream of gourd with artichokes to the rosemary and creaking of ham"—a winner, by the way. Dress: Business/business casual Prices: Moderate Reservations: Not necessary L'Eixample: Paco Meralgo C/ Muntaner 171 +34 93 430 90 27 This minimalist bar has everything that is fun about tapas—a wealth of choice, energetic crowd, bantering waiters—while eliminating intimidating elements with an English menu and balanced gender ratio (Barcelona tapas bars are often dominated by older men). Be prepared for conversation here—your neighbors won't be shy with suggestions. Must-trys include the potato bomba and raw cod salad. An elderly customer took pains to explain that the Catalan custard, an eggy crème brulée, is actually a local invention. "The French stole it!" Dress: Casual Prices: Inexpensive Reservations: Not necessary Related LinksFace to Face With the Monster ThickburgerFace to Face With the Monster ThickburgerTable for One: Paris
Don't Take a Flier on Airlines
Tue, 22 Jul 2008 04:00:00 -0000
Even as the nation's network carriers began reporting billions in second-quarter losses last week, a furious rally drove share prices up by 45 to 60 percent. The market shrugged off the $1.4 billion loss reported by the parent of American Airlines, the nation's largest carrier, and ran its stock up 59 percent. The nation's second-largest airline, United, will report losses in the $3 billion range this week, yet its shares climbed 58 percent. Why the irrational aeronautic exuberance? Last week's unprecedented decline in the price of oil, which plummeted more than $16 and closed around $130 a barrel. With fuel now accounting for about 40 percent of the airlines' costs, sharply lower oil prices surely looked like good news to the markets. But irrational exuberance is nothing if not irrational. The biggest airlines—American, United, Delta, Northwest, Continental and US Airways—can't make money at $130 a barrel. They can't make money at $100 a barrel, either. Nor can their smaller competitors. Even the double-digit cuts in passenger capacity and triple-digit aircraft retirements planned for the fall probably won't restore profitability unless oil drops to about $80. (That's what oil sold for late last summer, the last time the big carriers were consistently profitable.) And since both business- and leisure-travel demand is falling, the price hikes and fee increases announced with metronomic regularity this spring and summer are likely to be offset by fall and winter fare sales. "Don't you dare rain on my parade," an airline executive snapped at me Friday evening. "I want one weekend this summer when I can fantasize about not being in bankruptcy next year." I hope he enjoyed his weekend, because that brutal reality—every U.S. carrier except Southwest Airlines faces bankruptcy and possibly even liquidation—cannot be ignored. None are sufficiently hedged against triple-digit oil prices. None can ground planes or lay off staff fast enough to keep their corporate heads above the rising tide of red ink. And there's no playbook to consult. Think I'm being irrationally pessimistic? Tell it to Fitch Ratings, which says there could be "multiple bankruptcies and liquidation" among the major airlines next year. "The industry's current structure is unsustainable in the current fuel environment," Fitch said last week. And if you don't like analysts analyzing, listen to Virgin Group's Richard Branson, whose own worldwide airline empire is shaky. He predicts "spectacular casualties" among the big carriers in the next 12 months. Perhaps most frightening is that no one can agree on which of the carriers are most at risk. Last Friday, for example, J.P. Morgan Chase double-jumped United shares to "overweight" from "underweight," primarily because the lead analyst thought the airline would announce a big new borrowing scheme this week along with its second-quarter loss. But just hours later, Moody's cut United's debt rating two steps to "Caa1," seven notches below investment grade. What's the chaos mean in the long term for business travelers? To be honest, I don't know. Even 30 years of plopping myself down in seat 2B isn't particularly preparatory or enlightening. And the longer oil prices remain in triple digits, the less the lessons of the 1990 to 1995 period seem revelatory. But I can offer several watch-your-back tips for the next several months on the road. Confirm Your Flights If you've booked travel for any time after Labor Day, make sure your flights are still on the schedule. Airlines have dropped routes without notice all summer, but the big tranche of cancellations begins on September 2. Overnight, most carriers will shrink their schedules 5 to 15 percent . Even if your airline will still fly on your route, it may have cut frequencies, so check that it has "protected" you on another flight and remembered to match up your onward connections. Avoid Smaller Airports The airlines are weeding out service to smaller airports, partially because they bring the least traffic into their hubs and also because the routes are flown with inefficient regional jets. If possible, book flights from the closest hub instead. Expect Less Help As they scramble to cut costs, airlines are thinning their already depleted ranks of front-line airport employees. That'll mean longer waits to check in, check bags, and load passengers and luggage onto planes. Carriers are also chopping mechanic jobs, so there will be more delays and cancellations for mechanical reasons. And wherever they had staffed flights above the federally mandated minimums, they are reducing the number of flight attendants. That means even less in-flight service. Have a Plan B—and a Plan C Although wags now openly speculate on the survival odds of one carrier or another—Midwest, Frontier (already operating in Chapter 11), US Airways, Sun Country and Spirit seem to be popular picks in death pools—I wouldn't assume any carrier will fold. Or survive. Know your options for every flight you book. And carry your Plan B and Plan C with you in case your carrier folds while you're on the way to the airport. Seriously. Drain Your Mileage Programs Finally, stop "banking" frequent-flier miles. If you've got enough miles to claim an award, use them now. The value of miles is depreciating even faster thanks to the route cutbacks and new fees imposed when you redeem an award. Besides, if your airline collapses, there's no guarantee that another carrier will step in and honor unused miles. The Fine Print… Midwest Airlines, the Milwaukee-based boutique carrier, is the latest to slash its operations. It announced on Sunday that it would contract its overall capacity by upward of 40 percent. By September, it will have grounded about a third of its aircraft and cut a dozen cities off its route map. Related LinksWhy Airline Mergers Don't FlyFlying on Empty Deals Taxi for Takeoff
In for a Landing
Wed, 16 Jul 2008 10:00:00 -0000
When Herb Kelleher started Southwest Airlines in 1967, he was a pariah, a chain-smoking, Wild Turkey-swilling lawyer-entrepreneur who tried to undercut his established competitors. The airline was in legal limbo for four years because of disputes over flight routes before its first plane was allowed to take off. Four decades later, Kelleher’s upstart airline is now the country’s largest in terms of market capitalization and has posted a profit for 35 straight years. It’s the only major U.S. carrier making money right now, even as smaller airlines fold at a rate of about one a month and legacy carriers, stuck with record-setting fuel prices, stagger toward bankruptcy. This spring, at age 77, Kelleher retired as Southwest’s chairman and scaled back his responsibilities to an advisory role, a position he’ll hold for five years. It’s a good time for him to ease up. The airline business is going through a difficult period, and Southwest was recently hit with a $10.2 million fine because it had flown planes after their required inspection dates. But Kelleher leaves Southwest in excellent shape compared with its peers. With a $10 billion market cap and ample cash reserves, it’s poised to solidify its position as the low-fare airline. Condé Nast Portfolio reporter Matthew Malone met Kelleher at Southwest’s Dallas headquarters, where the executive, a longtime three-pack-a-day smoker, elbowed up to a silver ashtray the size of a turkey platter. Kelleher has never cared much about appearances, and he’s certainly not changing now. During the 90-minute interview, he smoked four Merits, kissed a Southwest intern on the cheek, and jokingly picked his nose. He also talked about the foolishness of mergers, the state of the Federal Aviation Administration, and why February is the worst damn month of the year. Between the lackluster economy and soaring fuel prices, some say that things are downright apocalyptic for airlines these days. Is the business model simply one that doesn’t work anymore? It’s very difficult to make it work when oil is at $130, $135 a barrel. Southwest has been protected from many of the difficulties of this time: Our fuel hedges saved us $727 million last year alone. But our revenues are down as a consequence of higher fuel costs, and I think our principal advantage at Southwest and in this milieu is the fact that we’re so strong financially. We have the lowest cost in the industry per available seat mile, the strongest balance sheet, the most equity of any carrier, so we’ve always been fit for whatever exigency confronted us. We’ve always been very conservative and made sure that we’re ready for the bad times, because they always come. The last major round of restructurings, after 9/11, allowed the legacy carriers to cut into Southwest’s cost advantage. More restructurings and bankruptcies are on the way. Will that make the company more vulnerable? No. As a matter of fact, I think our competitive advantage is widening. The other carriers are increasing fares and adding fees so quickly that I think that we’re regaining our low-cost-fare advantage. There’s another factor: I refer to Chapter 11 as the washateria—you go to the washateria, and you wash out all your sins and get a fresh start. Once you’ve been through it, your opportunities are narrowly constricted with respect to restructuring, because you’ve already terminated your benefit pension plans, you’ve got a reduced lease rate on your airplanes, you’ve gotten better financial terms from your lenders, and it’s very hard to come up with substantial savings the next time around. If you had a crystal ball, what would it reveal about where the industry will be a year from now? I’d love to give 10-year projections. The shorter ones are harder. It depends on where fuel prices are, but I think you’ll see fewer airlines. That process has already started, with the airlines that have ceased operations. Consolidation is something that a number of carriers think is a way to salvation. I’m not sure it is, as far as fuel prices are concerned, which is the primary issue. The Delta-Northwest merger is well on its way. They have to jump the regulatory hurdles, and then, of course, you have to work like crazy to make sure it actually works out the way you had planned. Which carriers are the most vulnerable to going under? I never get into that. I don’t want to be a party to a run on the bank. One of your last official duties as chairman was to testify before Congress about the fine that Southwest had to pay over safety inspections. Some planes were flown after their official F.A.A. inspection dates. What’s your take on that incident? We reported ourselves to the F.A.A.—that we inadvertently and unintentionally missed these inspections, and the principal inspector said, You’ve got 10 days to do it. There may have been a technical issue, but there was never a safety issue. And there were never any planes that placed passengers at risk. I don’t mean to demean it, but in a sense it was a question of filing the wrong form, so to speak. Boeing said flying the planes was okay, and a former lead investigator for the National Transportation Safety Board said it was okay. There was no threat. Would you do anything differently? The appropriate route would have been to go and get an alternative means of compliance from the F.A.A., and I’m quite sure that they would have granted it. That’s what I regret, that we didn’t do that. That whole issue became political pretty quickly, and in the middle of it, you scrapped plans to outsource some of Southwest’s maintenance to an operation in El Salvador. Why the change? It was a question of timing. We didn’t say that we would never do it. We just said we’re not going do it now, because we don’t need to add a layer of complications with respect to a new maintainer. Outsourcing is a word that covers a multitude of different concepts, and you have to realize a lot of the talk about it is really a product of union activity, where they’d like to keep the work in the United States. From a safety standpoint, it’s perfectly safe. Now that you’re stepping down, how much interaction will you have with the company? Really, what I am here is C.E.O. Gary Kelly’s servant. He is a superb chief executive officer, and I would anticipate that he would ask me from time to time to get involved in some special projects. The dustup with the F.A.A. is an illustration. I really serve at his beck and call. Is there some innovation that you think could help save this industry? Something on the horizon that you look at with great interest? Well, no. I don’t think there’s any silver bullet. I think the carriers in the present circumstances are doing exactly what they need to do in order to survive. For the first time in my memory, they’re very busy reducing capacity, which of course will provide fewer seats. That saves fuel, and you’re able to raise fares, I think, fairly substantially. Fewer and fewer people will be flying, and in a sense that’s a sad thing for me. A lot of the American public will be deprived of the opportunity to fly. But I think the carriers have to do it. They don’t have any alternative. How much will fares go up during the next 12 months? The latest figures I saw, through April or May 2008, was that average fares had gone up 4.8 percent already this year. And with reductions in capacity, I wouldn’t be surprised if average fares went up by another 5 or 6 percent this year. I’m not talking about Southwest, by the way, just the legacy carriers. The F.A.A. has been under a lot of pressure lately. What’s your view of the agency? The F.A.A. has a splendid record. There’s no question about that. Commercial airline travel has never been safer, and it’s grown steadily safer over the past four or five years, so the end result has been superb, absolutely superb. I think reform of the air-traffic-control system is the major issue facing the F.A.A. as a whole. It’s an antiquated system, and a lot of the difficulties that we were talking about earlier for the airlines would go away if you had a modernized system that was more efficient. I’m hopeful that we’ll make steady progress toward the adoption of next-gen, as they call it—an air-traffic-control system that will be G.P.S.-oriented. What has prevented that from happening so far? You’re stepping on a sore toe right now, because I became an apostle of that in 1993, and here we are 15 years later and we haven’t made a lot of progress. Backpackers are using G.P.S. to find out where they are in the woods. Truckers are using G.P.S. to find out which routes they should take to their destinations. Buses are using it. Private aircraft are using it. Let me see, who are the only ones who don’t have G.P.S.? Commercial airlines. Isn’t that astounding? You have to be a visionary and say, “We don’t need this today, but we’re going to need it very badly 10 or 15 years from now.” Airlines need it, but the government has to take the steps to set it up. If you stop to think about it, we’re really a little slice of salami in a governmental sandwich. The F.A.A. tells us what we can do with the airplane, right? You can’t push back from the gate, can’t taxi, can’t take off without the F.A.A. telling you. Our passengers on the ground are processed by the Transportation Security Administration. And guess who owns the airports. Governmental bodies. That’s why we have so little control over our destiny. Don’t misunderstand me—all of those things are needed. But it would be interesting if you said that all department stores are now going to have X-ray machines. You’re going to have to take your shoes off, your coat off, before you get into Macy’s. That might cut back on their patronage just a little bit. Is there a particular day or incident from Southwest’s history that you remember most fondly? For sheer drama, I would have to say that after litigating for four years in 31 different courts and administrative agencies, the arrival of our first airplane was a pretty dramatic event. I burst into tears when I kissed it on the nose and then went around and stuck my head in the engine, at which point a mechanic grabbed me and said that if the thrust reverser went off, it would decapitate me. I said, “You know? I really don’t give a damn.” What’s the worst investment you ever made? Gee, there are so many, it’s hard to pick out one. Enron, I guess. I must say, I didn’t pick Enron. It was a money manager. So choose one: the cigarettes or the Wild Turkey. Ha! It would be the cigarettes, and I’ll tell you why: I stop drinking Wild Turkey for a month every year in February, but I could never stop smoking for a month. I’m an addict. I acknowledge it. Why February? I was afraid you were gonna ask that. It’s the shortest month. [Laughter] About 20 years ago, a doctor told me, “As much as you drink on a regular basis, I think it’d be great for your liver if you took a month off.” So I said okay—February. I hate leap years! Despise them. Related LinksThe Safe (but Scary) SkiesFlying SoloFlying on Empty
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