BP shares rise on $583M quarterly loss
LONDON -- BP, the first of the major oil companies to report earnings this week, said Tuesday that it had lost $583 million in the first quarter of 2016, compared with a $2.6 billion profit in the same period last year.
Lower oil prices were behind the loss for BP, whose results were nonetheless better than analysts had expected. BP shares rose $1.70, or 5.4 percent, to close Tuesday at $33.49.
In the current environment, analysts say an oil company's stock price is largely determined by the dividend. Sustaining it is "the first priority within our financial frame," BP's chief financial officer, Brian Gilvary, said in a news release on Tuesday.
BP said it had lost $1.2 billion in its key oil and gas exploration and production unit, which was a big money earner when prices were high. Oil prices for the quarter averaged $34 a barrel for Brent crude, more than a third lower than a year earlier.
"The entire industry is going to be loss-making in the first quarter," Oswald Clint, an analyst at Bernstein Research in London, wrote in an email.
-- Bloomberg News
Slump hurts Exxon Mobil's credit rating
IRVING, Texas -- Exxon Mobil Corp. was demoted from the top credit rating Tuesday by Standard & Poor's for the first time since the Great Depression as the collapse of the biggest oil-market rally in history strangled cash flows.
The global crude explorer sought to retain the AAA rating when S&P placed it on notice in February. Citing concern that credit measures would remain weak through 2018, S&P warned Exxon that it was in danger of losing the top grade first bestowed on the oil giant in 1930. The rating was lowered to AA+, S&P said in a statement on Tuesday.
The oil-market crash that began in late 2014 has choked crude-producing nations such as Nigeria and Venezuela of cash, thrown hundreds of thousands of employees out of work, stalled drilling and pipeline investments around the world and even reverberated into ancillary industries such as steel-making and railroads. Exxon was one of the last holdouts against the wave of credit downgrades that engulfed oil drillers with diminishing prospects of paying debts, dividends and rig fees.
The downgrade will not only raise Exxon's cost to borrow money but will also hurt its status among oil-rich governments as a premier partner with which to do business. As Exxon Vice President of Investor Relations Jeffrey Woodbury said in February, the company's AAA rating has been a key selling point when competing for drilling licenses.
-- Bloomberg News
Ford investing $1.6B in Michigan, Ohio
DETROIT -- Ford Motor Co. is spending $1.6 billion to upgrade two U.S. plants for new products.
Ford says it's investing $1.4 billion in its Livonia, Mich., transmission plant to build a new 10-speed transmission. The company said it will create or retain 500 hourly jobs at the plant to make the transmission, which will debut later this year on the F-150 Raptor.
Dearborn, Mich.-based Ford is also investing $200 million in its Ohio Assembly Plant to build Super Duty chassis cabs, which are used for commercial vehicles. Ford said it will create or retain 150 jobs at that plant.
Ford said the projects are part of its commitment to invest $9 billion in U.S. plants over the next four years.
-- The Associated Press
Tribune says bidder Gannett 'unreliable'
NEW YORK -- Tribune Publishing said Tuesday in a letter that USA Today owner Gannett was "erratic" and "unreliable."
Nonetheless, Tribune said it is still considering the takeover offer from Gannett, valued at about $815 million after including Tribune's pension obligations and $390 million debt.
Tribune's letter comes a day after Gannett made public its bid to buy the owner of the Los Angeles Times and Chicago Tribune. Gannett Co., based in McLean, Va., said Monday that Tribune refused to have meaningful discussions about a deal.
In its letter Tuesday, Tribune said Gannett executives canceled a meeting without reason and once asked it to make a decision about the proposal within 90 minutes.
"Gannett has been playing games," Tribune said in the letter, which was signed by Tribune Chief Executive Officer Justin Dearborn.
Gannett responded with its own letter Tuesday, saying that the meeting was canceled because a person from Tribune's team who did not know about the offer would be there.
"Tribune was well aware of Gannett's reason for canceling the dinner," Gannett CEO Robert Dickey said in the letter.
-- The Associated Press
German strike halts Lufthansa flights
BERLIN -- Lufthansa has canceled 895 flights scheduled for today from six German airports as government workers call short-term strikes in the run-up to wage discussions later this week.
The airline said Tuesday that its hubs in Munich and Frankfurt would see the most disruption. Some 87,000 passengers would be affected overall.
Public-sector workers doing ground handling and security checks were expected to walk off the job ahead of wage talks Thursday with the government. The ver.di union is looking for a 6 percent pay rise for its 2 million members.
Lufthansa, which is not part of the negotiations, deployed practices it has used during strikes by its own employees to prevent long lines and chaos at airports. It canceled flights ahead of the start of the strike and urged passengers to check on their flight status.
Passengers with mobility limitations were cautioned that staff to assist them getting through the airport would be in short supply and that they should consider rebooking at no cost.
Of the canceled flights, 545 were to or from Munich, where the strike was to last all day. All intercontinental flights to or from there were canceled for Wednesday, the company said in its news release.
Strikes are taking place Tuesday at places like kindergartens and swimming pools. Garbage pickup and street cleaning in Munich were also affected.
-- The Associated Press
Business on 04/27/2016