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CNN Live At Daybreak
Kmart Coming Out of Bankruptcy
Aired April 23, 2003 - 06:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The Blue Light Special now spinning out of the red. Kmart has the OK to come out of bankruptcy.
Susan Lisovicz has the business buzz from New York.
Good morning -- Susan.
SUSAN LISOVICZ, CNN FINANCIAL NEWS CORRESPONDENT: Good morning, Carol. It's great to see you again, even if it means getting up in the middle of the night.
The fact is, yes, the Blue Light Special may be returning to Kmart. That is if you can find a Kmart, because it's going to be a much leaner operation. A bankruptcy court judge yesterday approved the reorganization plan for Kmart, the nation's third largest retailer, but it will have about a third fewer stores. It'll also be carrying about 80 percent less debt.
This is a victory for Kmart, because it's now expected to emerge from bankruptcy May 5. That's a full two months earlier than had been expected. It will also be canceling its old stock and issuing new shares. Not sure where Kmart will be trading, it's been delisted from Kmart.
One problem that still looms for Kmart, however, two big competitors, Wal-Mart and Target, and they've been eating Kmart's lunch in recent years. Very competitive environment out there so it's still another problem that looms for Kmart -- Carol.
COSTELLO: Yes, how do you beat Wal-Mart? How do you do that?
LISOVICZ: A lot of competitors have been having some big problems with that.
COSTELLO: Yes, and speaking of problems, let's talk about the airline industry. Any update on American Airlines for us this morning?
LISOVICZ: Well speaking of bankruptcy, you know Chapter 11 has been looming large for AMR, the parent company of American Airlines. The pilots union, which is one of American's three largest unions, says it will not revote on the huge pay cuts and concessions package it accepted recently, but it's not sure whether it's going to certify it.
Of course this all stems back from the disclosure that some bonuses that the unions had not known about were in fact issued for some top executives as well as these very nice pension plans and that angered all three unions. Two of them now say that they will be revoting. Pilots union says it's not sure whether it's going to certify it.
American stock, by the way, has been selling off, 22 percent it lost of its value on Monday. Eleven percent -- we had a huge rally yesterday, AMR down -- shares down 11 percent -- Carol.
COSTELLO: Ouch! Ouch! Ouch! Susan Lisovicz, many thanks to you, we'll get back to you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired April 23, 2003 - 06:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The Blue Light Special now spinning out of the red. Kmart has the OK to come out of bankruptcy.
Susan Lisovicz has the business buzz from New York.
Good morning -- Susan.
SUSAN LISOVICZ, CNN FINANCIAL NEWS CORRESPONDENT: Good morning, Carol. It's great to see you again, even if it means getting up in the middle of the night.
The fact is, yes, the Blue Light Special may be returning to Kmart. That is if you can find a Kmart, because it's going to be a much leaner operation. A bankruptcy court judge yesterday approved the reorganization plan for Kmart, the nation's third largest retailer, but it will have about a third fewer stores. It'll also be carrying about 80 percent less debt.
This is a victory for Kmart, because it's now expected to emerge from bankruptcy May 5. That's a full two months earlier than had been expected. It will also be canceling its old stock and issuing new shares. Not sure where Kmart will be trading, it's been delisted from Kmart.
One problem that still looms for Kmart, however, two big competitors, Wal-Mart and Target, and they've been eating Kmart's lunch in recent years. Very competitive environment out there so it's still another problem that looms for Kmart -- Carol.
COSTELLO: Yes, how do you beat Wal-Mart? How do you do that?
LISOVICZ: A lot of competitors have been having some big problems with that.
COSTELLO: Yes, and speaking of problems, let's talk about the airline industry. Any update on American Airlines for us this morning?
LISOVICZ: Well speaking of bankruptcy, you know Chapter 11 has been looming large for AMR, the parent company of American Airlines. The pilots union, which is one of American's three largest unions, says it will not revote on the huge pay cuts and concessions package it accepted recently, but it's not sure whether it's going to certify it.
Of course this all stems back from the disclosure that some bonuses that the unions had not known about were in fact issued for some top executives as well as these very nice pension plans and that angered all three unions. Two of them now say that they will be revoting. Pilots union says it's not sure whether it's going to certify it.
American stock, by the way, has been selling off, 22 percent it lost of its value on Monday. Eleven percent -- we had a huge rally yesterday, AMR down -- shares down 11 percent -- Carol.
COSTELLO: Ouch! Ouch! Ouch! Susan Lisovicz, many thanks to you, we'll get back to you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
