Airlines predict strong travel season
American Airlines Group Inc. and Southwest Airlines Co. on Monday forecast a strong summer travel season, a pivotal period for the industry when vacationers join business fliers to pack planes to their fullest.
American said second-quarter revenue for each seat flown a mile, a benchmark for traffic and fares, will exceed the projection it gave just last month. Southwest Chief Executive Officer Gary Kelly told employees he expects "great" seasonal travel.
A pickup in air travel would bolster an industry rebound as airlines seek greater pricing power. The summer months are the busiest for U.S. carriers, with passenger traffic peaking in July, followed by August then June, according to data compiled by Bloomberg. An Airfarewatchdog.com survey of 13,000 travelers found that 77 percent planned to fly on vacation this summer, compared with 15 percent who will drive.
"The U.S. domestic market continues to remain the driver of the overall strong demand" that should push pricing higher through the summer, Helane Becker, a Cowen & Co. analyst, said in a note to investors.
-- Bloomberg News
Canada group: Oil-sands growth to slow
Canadian oil-sands production will grow more slowly in the coming years amid uncertainty about cost increases and availability of capital, the Canadian Association of Petroleum Producers said Monday.
Oil-sands output will likely increase to 4.8 million barrels per day by 2030 from 1.9 million barrels a day in 2013, the oil industry lobbying group said in its annual forecast. Last year, the association said oil-sands production would likely increase to 5.2 million barrels a day.
Oil-sands developers have struggled with rising costs in northern Alberta because of labor shortages and distance from equipment suppliers. Total SA said last month it would delay a final investment decision at its Joslyn project, while Imperial Oil Ltd. last year increased the cost of its Kearl project by 18 percent.
"While the overall trends in the two forecasts are consistent, the difference between the two forecasts later in the period primarily reflects increasing uncertainty regarding project timing related to cost competitiveness and capital availability," the association said in Monday's forecast.
-- Bloomberg News
Time Inc. shares fall 4.9% after spinoff
Time Inc. shares fell Monday in their first day of trading after a spinoff from Time Warner Inc., reflecting the challenges of being the only public company in the U.S. focused just on magazines.
The shares, using the ticker symbol TIME, sank 4.9 percent to $22.34 at 10:35 a.m. in New York, where the company is based. Time Warner, which owns the Warner Bros. movie studio and cable networks such as HBO and CNN, rose 0.8 percent to $68.67.
By striking out on its own, Time Inc. will have to rely solely on the popularity of its titles, such as Sports Illustrated and People. Other periodical publishers such as Meredith Corp. and News Corp. have the help of assets such as a TV station or a book unit to shore up their still-falling advertising and circulation revenue.
"The greatest challenge is to get our organization focused on things [we] need to do for the future," Time Inc. Chief Executive Officer Joe Ripp said in an interview Monday on Bloomberg Television.
-- Bloomberg News
Cybercrime still increasing, report says
According to former U.S. intelligence officials, cybercrime remains a growth industry.
In a report Monday, the officials outlined scenarios for how trade theft tied to computer hackers, currently $445 billion a year, will worsen. They warned that financial companies, retailers and energy companies are at risk from thieves who are becoming more sophisticated at pilfering data from their servers.
The outlook "is increased losses and slower growth," with no "credible scenario in which cybercrime losses diminish," according to the report published by the Washington-based Center for Strategic and International Studies. Some of the damage will be hard to trace, such as economic downturns caused by foreign competitors selling products based on stolen designs and financial markets undermined by hackers.
"Cybercrime is here to stay," said Stewart Baker, a lead author of the study who was general counsel for the National Security Agency in the 1990s and later an assistant secretary at the Homeland Security Department.
-- Bloomberg News
Merck to buy Idenix for $3.9 billion
NEW YORK -- Merck & Co., the second-biggest U.S. drugmaker, has agreed to buy Idenix Pharmaceuticals Inc. for about $3.85 billion to expand its experimental pipeline for hepatitis C treatments.
Idenix holders will receive $24.50 a share in cash, Merck said in a statement Monday. The price is more than triple Idenix's Friday closing level of $7.23.
Buying the Cambridge, Mass.-based company will help Merck in the race to develop a daily, all-oral regimen that treats different strains of the viral infection and doesn't include ribavirin, a standard treatment for hepatitis C that has serious side effects. In April, Merck said its once-a-day hepatitis C pill, which combined two drugs, stopped the virus in a midstage study in 98 percent of newly treated patients with few major side effects.
"We've been talking with Idenix for a long time and have a long history in this field," said Roger Perlmutter, who joined the Whitehouse Station, N.J.-based company as president of Merck Research Laboratories in April 2013.
Idenix came to Merck after another company approached it about a possible deal, Perlmutter said Monday. Once that happened, Idenix started a sale, and "I'm delighted to say we won the process," he said.
Idenix's lead drug, IDX21437, works similarly to Gilead Science Inc.'s Sovaldi, which won U.S. regulatory approval in December and costs $84,000 for a 12-week course of treatment. Before the development of Sovaldi, hepatitis C treatment entailed a regimen of two or more antiviral drugs with many side effects.
-- Bloomberg News
Business on 06/10/2014