American Cuts Flights and News on Other Financially Challenged U.S. Companies for May 22

The items below are taken from the Credit Manager's Weekly Summary of Financially Challenged Companies. A full issue contains information on more than 200 companies. Please visit the insideARM bookstore for information on subscribing to the Summary.

Aerosonic Corp., a Clearwater, Fla. manufacturer of mechanical aircraft instruments, reported a fiscal net loss of $3.4 million. Revenue declined 19%–to $25.4 million.

American International Group Inc.’s shares sank to their lowest level in nearly a decade after the Manhattan, N.Y. insurer said it expects to raise $20 billion through its equity and debt issue, more than had been expected. Investors are also worried that the insurance giant will face further mortgage-related losses.

AMR Corp., the parent company of American Airlines, announced further flight reductions and now expects domestic capacity in its fourth quarter to be 11% or 12% lower than a year ago. The Texas-based carrier will retire at least seventy-planes to cut capacity and announced additional fees aimed at boosting revenue. While the carrier is looking for ways to offset high fuel costs, investors didn’t like the news, sending AMR’s shares sinking 14%.

Borders Group Inc.’s suitor could turn out to be rival bookseller Barnes & Noble Inc., the Manhattan, N.Y. firm which has put together executives and advisers to look into possibilities for acquiring Borders. Borders, the Ann Arbor, Mich.-based bookseller which recently announced possible liquidity issues, earlier put itself up for sale, with a market value of more than $380 million. A merger with Barnes & Noble could result in antitrust problems, but any suitor for Borders would have to assume about $550 million in the retailer’s debt.

Columbia Sportswear Inc., the Portland, Ore.-based maker of outdoor apparel and accessories, confirmed that it engaged in a round of layoffs, although it didn’t reveal the number of workers affected. The move is part of the company’s effort to streamline and realign with a new market strategy in the economic slowdown. Columbia, with about 4,000 employees, has about 1,700 workers in the U.S. 

Condell Medical Center, Libertyville, Ill., is reportedly in a deal to be acquired by Advocate Health Care of Chicago, the biggest provider of medical care in the area, for $180 million. Condell, which has faced some financial problems including accounting irregularities and crimped cash, should benefit from the merger with Advocate, which is sitting on a $1.5 billion pile of cash.

Fusion Telecommunications International Inc., a Manhattan, N.Y. provider of Internet services, reported a first quarter net loss of $2.4 million, including a $635,000 debt-extinguishment gain. Revenue fell 13%–to $11.5 million.

Home Depot Inc., the Atlanta-based home-improvement retailer, reported its first quarter net income tumbled 66%–to $356 million. Sales declined 3%–to $17.9 billion, with same-store sales slumping 6.5%. Home Depot, suffering from the effects of the weak housing market, also took extra charges in the quarter related to closing stores and slowing down its expansion.

Jaco Electronics Inc., Hauppauge, N.Y., reported a third quarter net loss of $590,000. Revenue declined 11%–to $44.5 million.

Movie Gallery Inc., a Dothan, Ala.-based video-rental chain, put the finishing touches on its Chapter 11 reorganization plan and has now emerged from bankruptcy protection. The company, wrapping up a $100 million exit financing facility, now operates as the second-biggest video-rental company in North America, with 3,300 locations.

Orleans Homebuilders Inc., Bensalem, Pa., reported a third quarter net loss of $55.7 million. Revenue declined 22%–to $113 million.