COMPANY NEWS IN BRIEF

Aeromexico seeks approval to fire workers

Mexican airline Aeromexico has requested permission from US bankruptcy court to dismiss 1 830 employees in a cost-saving measure to weather the economic shocks of the coronavirus crisis,according to court filings filed on Wednesday.

The proposed layoffs, of 855 unionized workers and another 975 who do not belong to a union, would save the company US$44 million on a recurring annual basis, Aeromexico said.

Although the cuts will first cost the company US$31 million in severance benefits, Aeromexico said the expected outcome “significantly outweighs the program’s one-time cost.”

Aeromexico sought approval from the court to carry out the layoffs by the end of the month, according to the court filings. The company did not specify which positions would be eliminated.

Aeromexico in June began a Chapter 11 restructuring process in the United States, becoming the third Latin American airline to file for bankruptcy protection, and has since received approval for up to US$1 billion in financing. - Nampa/Reuters

Uber see California win as national model

Gig economy companies want to turn California voters’ decision to make ride-service driver’s contractors into a model for the nation, as several states consider requiring drivers from Uber, Lyft and rival services be treated as employees with higher compensation.

Voters in California on Tuesday approved a ballot proposal by Uber Technologies Inc, Lyft Inc and its allies that cements app-based food delivery and ride-hailing drivers’ status as independent contractors, rather than employees.

Uber’s shares rose 12%, while Lyft jumped 9%. The companies, along with DoorDash, Instacart and Postmates, poured more than $205 million into the campaign.

According to California figures, 58% supported the measure. The results are incomplete and must still be certified.

The ballot measure, known as Proposition 22, carves an exception for ride and delivery companies in a controversial state labour law and offers gig workers some healthcare, minimum pay and other benefits. The state had said gig workers would have to be treated as employees under the law. - Nampa/Reuters

T-Mobile to pay US$200 million fine

T-Mobile US Inc will pay a US$200 million penalty to resolve a Federal Communications Commission (FCC) investigation into its Sprint unit over allegations it failed to comply with rules on a low-income subsidy program, the government said Wednesday.

The FCC settlement said Sprint may have received government subsidies for more than 1 million customers that did not receive service under the Lifeline program.

T-Mobile said in a statement it was glad the issue it inherited “is now resolved. We look forward to continuing to deliver reliable and affordable network connectivity to consumers.”

Sprint’s voluntary disclosure said “due to a software programming issue, its systems failed to detect that over a million Lifeline subscribers nationwide lacked usage over an extended period of time,” the FCC said.

The FCC disclosed earlier in 2019 it was investigating reports that Sprint, prior to its merger with T-Mobile, was improperly claiming monthly subsidies for serving about 885 000 Lifeline subscribers not using the service. - Nampa/Reuters

ProSieben returns to profit in Q3

German broadcaster ProSieben Media returned to profit in the third quarter as it recovered from a pandemic-induced hit in the spring, and reinstated its guidance for the full year.

The Munich broadcaster, being restructured by CEO Rainer Beaujean under the gaze of potential acquirers, reported adjusted net profit of 29 million euros (US$34 million), down 36% year-on-year but up from a second-quarter loss of 52 million.

Adjusted core profit was ahead by 13% year-on-year as advertising recovered, cost cuts kicked in and the group's e-commerce portfolio expanded.

"We are very satisfied with our development in the third quarter," Beaujean said in a statement. "As an early-cyclical company, we were now able to benefit from the economic recovery in the summer, following the difficult first half of the year, and have seen an upward trend in the advertising market."

Reported revenue was down 1% at 921 million euros, and lower by 4% on an organic basis in the quarter. Both the top line and adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) exceeded analyst expectations. - Nampa/Reuters

Commerzbank swings to Q3 net loss

Germany's Commerzbank said that it swung to a third-quarter loss, as the lender undergoes a restructuring and deals with the fallout of the coronavirus outbreak.

The net loss of 69 million euros (US$80.96 million) compares with a net profit of 297 million euros a year earlier. It is slightly worse than a consensus forecast for a 62-million-euro loss.

The bank set aside 272 million euros in provisions for future credit losses, up from 114 million euros a year ago and largely related to the pandemic. That is less than analysts had expected.

The bank, which is waiting for a new chief executive to arrive in January before deciding on a new strategy, has warned that it would post a full-year loss.

The bank is considering staff cuts, branch closures and streamlining of its international operations as part of its overhaul. "We have paved the way fourth further cost savings," said finance chief Bettina Orlopp. - Nampa/Reuters