Friday, July 31, 2009

What They Earn

Did you all know there’s a place where you can find what the big shots in Alabama government make? You can see that Troy King rakes in more than $160,000, that Joe Morton hauls in more than $190,000 and that Judge Bill Thompson brings in more than $194,000. Bob Riley is getting paid peanuts at nearly $113,000 a year. And Bill Johnson was pulling in about $88,000 a year. This explains all of the Mercedes and BMWs in the state-owned parking lots!
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Thursday, July 23, 2009

Chrysler Cash for Clunkers Program, Smart PR Or Not?

Chrysler Corporation just announced a beefed up incentive, Cash for Clunkers, to entice buyers to purchase their fuel efficient cars. Combined with a government program of the same name, auto buyers who trade in their old gas guzzlers stand to receive incentives of between $4500 and $9000. The programs are designed to get older, less fuel efficient vehicles off the road, and to boost the sale of Chrysler products obviously. It’s too bad the program is not in effect here in Germany, or else we could trade the “clunker” Mercedes A190 we hare having so much trouble with. For US auto buyers and Chrysler, this seems to be a win-win proposition, as consumer trust in the Chrysler brand sank when news of their imminent bankruptcy hit the presses.

New car sales for Chrysler plummeted by 47% between the first half of 2008 and the same period this year., but the auto maker has had sales woes for years. For this writer, the question arises; “How is giving away thousands going to increase revenue?” The 33 Chrysler models eligible for these incentives will obviously be sub-compact, compact, or super fuel efficient sedans. The point here being, the price markup for lower priced vehicles net’s less cash when these vehicles are sold in the first place, or at least one would think so.

The government’s contribution not withstanding, just how is giving away profit going to help a car manufacturer in bankruptcy? Maybe I am stupid or something, but this feels like one of those “bait and switch” deals to me. Given a statement by Steven Beahm, VP-sales operations Chrysler, it looks like getting people inside the dealership may be the reason the auto maker is “piggybacking” on the government shell out:

It is also interesting to note that Ford plans no such “matching” program for their buyers, and why should they? According to Mark Fields, Ford President of the Americas; “We feel we have an appropriate level (of incentives) right now.”
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Friday, July 17, 2009

British Airways To Raise GBP600M Of Cash Funding

LONDON (Dow Jones)--British Airways (BAY.LN), a U.K. airline, said Friday it plans to raise GBP600 million of cash funding to ensure it has strong liquidity consistent with the current difficult trading conditions.


-Launches GBP300 million convertible debt issue, which will be conditional on approval from shareholders.

-Funding expected to add GBP600 million of further liquidity bringing it to total of GBP2 billion.

-Revenue of GBP1.98 billion expected in first quarter ending June 30.

-Operating loss of around GBP100 million, which is slightly better than market expectation.

-GBP1.25 billion of cash and general facilities of around GBP130 million as at June 30.

-Securities will be senior unsecured convertible bonds due in 2014 which will be convertible into 15-20% of issued ordinary share capital of British Airways.

-Final size of offering will be determined at the time of pricing, which expected to be later Friday.

-Eligible existing institutional shareholders will be given opportunity to take up a pro rata allocation if they wish.

-Agreed terms with trustees of defined benefit pension schemes in U.K. to release some bank guarantees back to airline.

-Guarantees were provided in 2006 and were accessible by trustees only in event of airline's insolvency.

-Consequently up to $540 million (approximately GBP330 million) of bank facilities will become available for airline to draw in cash at any time until June 21, 2012.

-Already obtained facilities of more than $3 billion (GBP1.9 billion) specifically against future aircraft deliveries.

-Bookbuilding process will close prior to announcement of the final terms of convertible bonds which is expected to be made Friday and closing is expected on or about Aug. 13.
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Wednesday, July 08, 2009

Cash for clunker cars may hit some roadblocks

Victor Mansur, a recent UI graduate, drives a 1993 Jeep Cherokee. Under a government program to take effect at the end of the month, his vehicle could be eligible for a $4,500 rebate if he trades it in for a more fuel-efficient car.

But he — and local car dealers — have doubts whether people will trade in their clunkers in droves.
The Car Allowance Rebate System, or “Cash for Clunkers” program, will offer customers rebates of either $3,500 or $4,500 to trade in their older, less fuel-efficient cars to purchase or lease a new vehicle that gets more than 22 miles per gallon.

The goal of the program is to put more environmentally friendly, fuel-efficient vehicles on the road while increasing car sales and saving consumers gas money.

“It’s a win-win for everybody, not to mention the environment,” said Eric Bolton, a spokesman for the National Highway Traffic Safety Administration, which is working closely with manufacturers, dealers, and disposal facilities to get the program up and running.

But there’s a catch: The purchased cars must be brand-new.

“I wouldn’t do it because I would probably get more money for just trading in my car,” Mansur said.
UI junior Tor Smith, who drives a Mitsubishi truck, agreed.

“I don’t have the money to buy a new car right now,” she said.

Furthermore, there are specific requirements that eligible cars have to meet to be traded in. The vehicle must have been manufactured within 25 years of the buying/leasing date, have a combined city/highway fuel economy of 18 miles per gallon or less, and have been insured by the owner for at least one year.

Even local car dealers are uncertain about how popular the program will be. The recently signed law requires dealerships to recycle or destroy the old cars, so additional money for the trade isn’t an option.

If people can get more than the rebate amount for their car, there is little incentive to participate in the program, said Bruce Anderson, the general counsel for the Iowa Automobile Dealers Association.

More information :

Friday, July 03, 2009

Scrappage scheme, Darling?

Chancellor Alistair Darling has confirmed the long-expected news that the government will introduce a ‘cash for crapbox' (OK, that's not the official title, but it helps us remember it) car scrappage scheme, starting next month.

New car buyers will receive a £2,000 discount when they scrap their old car, which must be over 10 years old.

The government will stump up £1,000 of the discount, with the car industry paying the other half. The scheme will run from mid-May, and is scheduled to finish at the end of March next year.

Here's the technical stuff: the car you're scrapping must have been registered in the UK on or before July 31, 1999, and must have been continuously registered to a UK resident for 12 months before being scrapped. It must also have a current MOT certificate. So if you're thinking about hauling out the old Austin Allegro that's been rusting into a heap at the end of your garden for the past 20 years, don't. It won't work.

The £2,000 discount will apply to all new cars, not just low-CO2 or ‘green' vehicles - good news for Jaguar and Land Rover.

Darling also used the Budget to announce that fuel duty would increase by 2p per litre this September, and will rise by 1p per litre over the rate of inflation each April for the next four years. Oh, and some stuff about income tax and stamp duty, though we didn't really pay much attention to that.

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