In this issue:

Delta To Cut Thousands More Jobs

Growing Opposition to Electricity Dereg in Pennsylvania

Millions Remain Without Power Following Florida Hurricane

Amtrak Eliminates Pittsburgh's Three Rivers Route

Ford To Cut Back Production at St. Louis Plant

Got Drought? Then Sell Your Water

First Ever Repairs to 60-Year-Old Shasta Dam


From Volume 3, Issue Number 37 of EIR Online, Published Sep. 14, 2004

U.S. Economic/Financial News

Delta To Cut Thousands More Jobs

Delta Airline's CEO Gerald Grinstein announced on Sept. 8, a draconian 18-month restructuring plan which has the goal of cutting $5 billion in costs ($2.3 billion this year, $2.7 billion next year). The plan of the nation's #3 airline includes:

* The layoff of 6,000-7,000 workers.

* The "de-hubbing" of Dallas/Forth Worth, one of Delta's largest hubs. By Jan 31, 2005, the number of daily Delta flights departing from Dallas/Ft. Worth will be reduced from 256 to 21.

* The layoffs could spread to other "hubs." For example, at Orlando (Fla.) International Airport, where it is the largest carrier, Delta has already cut 16,000 jobs since 2001.

* The buildup of Delta's low-cost carrier, Song, which will eventually assume several of the flights that Delta now carries.

Further, Delta is seeking $1 billion in salary cuts and speed-up from its pilots' union, as part of the $5-billion package of overall cuts. Delta CEO Grinstein threatened on Sept. 8, that Delta could seek bankruptcy protection.

The 1978 deregulation of the airline industry set the stage for what is happening today. During the 1980s, under the first phase of dereg, the major airlines competed against one another. But since the late 1990s, in the second phase, the major airlines have been forced to compete with "low-cost carriers," like JetBlue, which are mostly non-union, keep pay levels very low, and cut costs to the bone. The major airlines, like Delta, United, and American, which attempt to maintain at least a semblance of a reliably operated structure, are at a distinct disadvantage. To this is added the depression-driven collapse of business air travel, and the residual effect of the events of Sept. 11, 2001, all of which have clobbered the bottom lines of the major airlines.

The major airlines have come up with a hideous answer to the crisis. Robert Crandall, former CEO of American Airlines, told the Sept. 2 Washington Post, "Today, you have an entire industry that has been subjected to a paradigm shift by the virtue of new [low-cost] carriers. The outcome in the end will be that every carrier, in one way or another, is going to have to get their costs down to the point where they are essentially the same as the low-cost carriers. That means [get] rid of fixed-benefit pension plans, completely and profoundly change their labor contracts, eliminate ... work rules, and reduce wage rates." These tactics are already being implemented.

America's enervated air grid is headed toward extinction. United Airlines, the #2 U.S. air carrier, is still in bankruptcy, and the #6 carrier, once-bankrupt US Airways, which is demanding huge concessions from its workers, may be headed in that direction again within months. US Airways has announced that it will discontinue most of its flights out of Pittsburgh. By early 2005, United, US Airways, and Delta may be in bankruptcy, representing 42% of air passenger travel.

Growing Opposition to Electricity Dereg in Pennsylvania

An outrageous ruling by the Public Utility Commission of Pennsylvania in mid-August has galvanized a fight against their rabid deregulation program, which includes Democratic Governor Ed Rendell, Duquesne Light, consumer advocates, and steel companies U.S. Steel, Allegheny Ludlum, and Universal Stainless & Alloy Products, the Pittsburgh Post-Gazette reported Sept. 3.

The PUC voted to end Duquesne Light's regulated price to customers three years from now, although the utility had requested a modest rate increase over the next three years, and a total six-year rate cap, to keep prices stable. Saying its aim is to increase competition, the PUC mandated that the utility go on the "open market" in three years, and sell power to industrial customers at an hourly rate!

"This puts our industrial sector at risk and presents a barrier to the creation of other new high-wage jobs in our state," Rendell stated. "The plan also makes Pennsylvania's economy vulnerable to electric commodity speculators," which is "exactly what happened in California two years ago, after that state similarly banned long-term power contracts."

"Pennsylvania is a manufacturing state," Rendell stated hopefully, "and my administration has been working hard to build on that reputation.... [W]e can't afford a plan that takes us in exactly the opposite direction."

Millions Remain Without Power Following Florida Hurricane

Of the approximately 4.5 million Floridians who lost electric power in the Sept. 5 winds and downpours of Hurricane Frances, some 2.5 million were still without power as of the afternoon of Sept. 7. Florida Power and Light had 1.5 million out, with the largest numbers in Miami-Dade (estimated end of Sept. 9 to restore) and Broward (estimate end of Sept. 10 to restore). The biggest problem is Palm Beach with 540,000 still out. Tampa Electric had an additional 250,000 customers without power on Sept. 7 afternoon; Progress Energy in Central Florida had 600,000 still out.

Re: Water control infrastructure. The issue is how to manage the super-heavy run-off throughout the low-lying Florida Peninsula. A system of 127 pumps and gates stretching northward from Lake Apopka, was activated to the hilt as of Aug. 30, to move out the rain from the last hurricane, to make way for Frances. The South Florida Water Management Agency runs this system. There are high dikes in the Lake Okeechobee system, dating back to flood control put into place after the legendary 1928 hurricane broke through a levee, causing 2,500 deaths in that breach. The 30-foot high Herbert Hoover Dike was put in after that. These kinds of system, however, have not been fully maintained, and even been the target for shut-down as "unnatural!"

A Miami Herald article said Florida was "lucky" because its National Guard has just had two battalions returned from Iraq, one in March, and the other in June, and has no large Guard units there now. Guard units from North Carolina are deploying to Florida.

Amtrak Eliminates Pittsburgh's Three Rivers Route

As of March 1, 2005, Amtrak will close down the Three Rivers route west of Pittsburgh, thus ending its only service to Akron and Youngstown, Ohio, Post-Gazette and Akron Beacon Journal reported Sept. 3.

Amtrak, the nation's passenger railroad, decimated by decades of underfunding by the Federal government, officially announced Sept. 3 that a number of cities in Florida, Ohio, and Indiana will no longer be served by passenger trains, because Amtrak is getting out of carrying mail and express business packages for the U.S. Postal Service.

In Florida, rail service will be withdrawn from Waldo, Ocala, Wildwood, and Dade City, as of Nov. 1, when Amtrak ends its New York-Miami Palmetto route, to be replaced by New York-Savannah.

In Pennsylvania, Ohio, and Indiana: on Nov. 1, Amtrak will eliminate one train on its Three Rivers route between New York and Chicago. On March 1, 2005, service on the route will be stopped west of Pittsburgh—hitting Youngstown, Akron, and Fostoria, Ohio, as well as Nappanee, Indiana.

Ford To Cut Back Production at St. Louis Plant

Ford will end the second production shift at its suburban St. Louis sport utility vehicle (SUV) assembly plant, effective Jan. 3, eliminating about 800 more jobs, the St. Louis Post-Dispatch reported Sept. 7. The job cuts at the Hazelwood plant, blamed on declining sales of sport utility vehicles, come after Ford's announcement of 1,600 layoffs for three weeks at its truck plant in St. Paul, Minnesota.

Got Drought? Then Sell Your Water

The Denver suburb of Aurora has cut a deal with Arkansas Valley farmers to buy 4 billion gallons of the farmers' water, according to Bassmaster, "The Worldwide Authority on Bass Fishing," Sept. 7.

"For the people of Aurora, it means they are going to have more water in the coming year. For the people in the Arkansas Valley, it means an influx of cash for the farmers who need it during the drought, so everybody wins," said Aurora Mayor Ed Tauer.

The $5.5-million water deal, the largest temporary water lease in state history, was made possible by new legislation, which allows farmers to lease portions of their water year-by-year.

The water is enough to fill the city's Quincy Reservoir more than four times.

First Ever Repairs to 60-Year-Old Shasta Dam

At the 60-year-old Shasta Dam in California, the first-ever repairs are underway to fill cavities, the Redding Record Searchlight reported Sept. 8. During the next several months, workers will repair 100-odd patches of missing or weathered concrete at the 445-foot-high Shasta Dam in California; damage due to weather and water flowing down the face of the spillway. The work is the first of its kind since the dam was completed 60 years ago, according to an engineer with the U.S. Bureau of Reclamation. Many of the spots to be repaired—which were identified in an examination of the spillway in the late 1990s—are small and shallow, but the largest cavity is 14 feet wide, 4 feet high and 1.5 feet deep. Officials claimed that the divots do not represent a structural threat to the 15-million-ton dam—which holds back 4.5 million acre-feet of water—but fixing them will prevent further erosion.

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