Business news in brief

FAA deems flight-share service illegal

WASHINGTON -- The trend in sharing services popularized by Uber Technologies Inc. and Airbnb Inc. will take longer to gain a foothold in the world of aviation, if at all.

The Federal Aviation Administration reviewed its rules and determined that AirPooler Inc., which connects pilots with passengers willing to split fuel costs and other expenses for travel, isn't operating legally.

The decision this week erects a barrier to extending the so-called sharing economy into air travel. Car-hailing service Uber and room-rental company Airbnb have faced similar legal hurdles as traditional industry competitors -- and the legacy rules that apply to them -- confront technological changes in the way customers seek to use and pay for day-to-day services.

"There's a really deep underlying economic basis" for the shared-services model, AirPooler Chief Executive Officer Steve Lewis said Friday in a telephone interview. "It's much more than a fad for the shared economy because you have all these assets around that are being underutilized."

The FAA's legal interpretation in the AirPooler case rejects the idea that the air-travel service simply amounts to cost-sharing rather than a commercial aviation operation. The service is equivalent to charter flights and would require additional licenses and regulatory oversight, the FAA said in an Aug. 13 letter to a lawyer for AirPooler.

-- Bloomberg News

British economy up 0.8% in 2nd quarter

LONDON -- The British economy maintained its momentum in the second quarter as output finally surpassed the level seen before the global financial crisis.

Gross domestic product grew an unrevised 0.8 percent between April and June, the same as in the previous three months, the Office for National Statistics said in London Friday. That left output 0.2 percent above its previous peak in the first quarter of 2008. The economy expanded an upwardly revised 3.2 percent from a year earlier, the most since the final quarter of 2007.

While the figures provide a boost for Prime Minister David Cameron nine months before he seeks re-election, Bank of England Governor Mark Carney warned this week that the economy faces challenges and signaled officials are in no rush to raise interest rates. With the euro-area recovery stalling and crises in Ukraine and the Middle East casting a shadow over global prospects, investors are betting the Bank of England will maintain the benchmark rate at a record-low 0.5 percent until May.

"Events in Ukraine are weighing on the internationally exposed manufacturing sector," and the "expansion will get more lopsided in the next couple of quarters," said Rob Wood, an economist at Berenberg in London.

-- The Associated Press

Supervalu reports customer data breach

Supervalu Inc., a U.S. supermarket chain concentrated in the Midwest, suffered a data breach that exposed customers' payment-card information, marking the latest hacker attack on the retail industry.

The data may have been stolen from cards used in Supervalu stores from June 22 to July 17 after a network intrusion, the Eden Prairie, Minn.-based company said in a statement Friday. Payment companies have been notified and law-enforcement agencies are investigating the breach, which affected 180 Supervalu markets and liquor stores, it said.

Supervalu joins a lengthening list of companies whose systems have been compromised. Minneapolis-based retailer Target Corp. was victim of a breach last year that allowed hackers to gain access to payment data for 40 million customers' cards. Hackers in Russia have amassed 1.2 billion sets of looted user names and passwords, the largest known cache of stolen personal information, Hold Security LLC said this month.

"We have had no evidence of any misuse of any customer data," Supervalu Chief Executive Officer Sam Duncan said in Friday's statement.

-- Bloomberg News

Investors put $680 million in junk bonds

For the first time in more than a month, investors are putting more money into junk-bond funds than they're withdrawing as the market recovers from its biggest slump in a year.

Investors deposited $680 million into U.S. high-yield bond funds in the week ended Aug. 13, following a record $7.1 billion withdrawal the prior period, according to Lipper. From July 10 to Aug. 6, they pulled $12.6 billion.

Demand is emerging after the more than $1 trillion market lost 1.92 percent in value from June 23 to Aug. 1 as geopolitical conflicts escalated in Ukraine and Gaza, prompting investors to dump risky assets. Since then, the debt has gained 1.38 percent, with firms from Citigroup Inc. to Barclays PLC recommending investors snap up the securities.

"When we saw these big outflows we were looking to buy stuff," said Mark Okada, chief investment officer of Dallas- based Highland Capital Management LP, which manages $19.5 billion. "You would think the massive outflow would have done more damage to prices, but the market has been handling it pretty well."

-- Bloomberg News

Unsecured Lehman creditors to be paid

NEW YORK -- Unsecured general creditors of Lehman Brothers will get $4.6 billion in their first round of payouts from the bankrupt investment bank next month.

Lehman's bankruptcy in September 2008 marked the start of the global financial crisis and was a major catalyst of the financial meltdown. It was the largest bankruptcy in U.S. history, with Lehman listing $639 billion in assets at the time.

Trustee James Giddens filed a notice Friday about the distribution, which is expected to start about Sept. 10.

Unsecured general creditors had to wait for their distribution as all customer claims were satisfied first. The claims of secured and priority general creditors also were fulfilled.

"That such a distribution is even possible represents an extraordinary achievement that was far from certain when the liquidation began," Giddens said in a statement.

Lehman's individual retail customers were repaid in the first few days of the brokerage's liquidation. But it took several years of negotiations before Lehman's divisions could agree on how claims for larger customers of each unit, such as hedge funds or institutional investors, would be paid.

-- The Associated Press

Business on 08/16/2014

Upcoming Events