American, US Airways may merge to form largest U.S. airline

A global recession and a surge in fuel prices sparked a frenzy of airline mergers and acquisitions over the last decade, as carriers joined forces to stay airborne amid economic turbulence.

Merger mania is not over. The biggest yet may now be in the works, combining American Airlines and US Airways into the nation's largest airline with up to 1,500 planes in its main line and regional fleets and more than 120,000 employees.

Analysts say a merger between Fort Worth, Texas-based American and Tempe, Ariz.-based US Airways could be announced as soon as January. It would produce a mega airline with an estimated value of about $8 billion. At Los Angeles International Airport, American is already the largest airline.

Airline experts debated the financial merits of a merger, but they agreed passengers could face some short-term headaches if a deal happens.

"Mergers are never good for passengers because there are always disruptions," said Joe Brancatelli, an airline expert and online columnist on business travel.

Video chat: Airline workers have gripes too

If merger history is any guide, the integration of American and US Airways could lead to reservation system glitches, labor disputes and a cut in services to some markets, experts say. Airline mergers, they add, mean fewer competitors and thus higher fares.

"I believe merging the two companies would be at least a two-year difficult period with many challenges," said Ray Neidl, an airline analyst for Maxim Group, a New York investment banking firm.

Executives of the parent companies of US Airways and American Airlines are meeting behind closed doors and declined to comment publicly on a potential merger. But the union for American Airlines pilots, which supports a merger, says an integrated American-US Airways would fly more efficiently and offer more destinations.

Still, Tom Hoban, spokesman for the Allied Pilots Assn., concedes that "there are always going to be some operational challenges."

Indeed, airline mergers rarely run smoothly.

Dozens of United Airlines flights have been delayed over the last year because of computer glitches, apparently resulting from efforts to switch over to the reservation system formerly used by merger partner Continental.

Integrating labor groups, such as pilots, can also lead to problems, such as strikes and job actions.

US Airways completed a merger with America West Airlines in 2005 but has yet to get pilots and flight attendants from the two airlines to agree on integrated employment contracts.

After filing for bankruptcy last year, American Airlines parent AMR threw out its previous labor contracts and jumped into strained contract negotiations with its pilots. AMR contended American Airlines pilots filed an unusually high number of last-minute maintenance work orders in September, delaying hundreds of flights, in a bid to coerce management into reaching a deal. The pilots' union conceded that the pilots filed the maintenance orders but only because it was required of them. The pilots voted this month to approve a new labor contract.

By cutting competition, a merger between American and US Airways may push up fares but not significantly, said UC Irvine Professor Jan Brueckner, who coauthored a report on the effects of airline mergers. In the end, he said, cost savings created by the merger would more than make up for the higher fares.

"This impact is likely to be dwarfed by the network benefits enjoyed by passengers and by the cost synergies of the merger, some of which will eventually be passed on to consumers," Brueckner said.

Whatever those challenges, frequent fliers don't seem too worried.

Mitch Smith, a frequent flier from Minnesota, said he isn't expecting higher fares. "There will still be United, Delta and Southwest to compete with," he said.

Karen Constine, a public affairs and cultural management consultant from Los Angeles, is hopeful a merger could improve American, an airline she often flies abroad.

"If this helps bring more services for customers, then that certainly is great," she said.

American, the nation's fourth-largest airline, has been the subject of merger talk since AMR filed for bankruptcy in November 2011.

US Airways, the fifth-largest airline, has pushed for a merger, arguing that the two airlines can combine to better compete against bigger carriers such as Delta, which merged with Northwest in 2009, and United, which merged with Continental in 2011.

US Airways submitted a merger proposal in November that would give AMR creditors 70% of the new mega airline, leaving US Airways 30%, according to news reports.

US Airways went so far as to convince three of American Airlines' unions to back a merger. One of the key arguments for a merger is that US Airways' extensive service on the East Coast can help boost American's sparse presence in the region.

Although American Airlines executives say they want to exit bankruptcy before considering a merger, Neidl estimated that the odds of a merger with US Airways before American exits bankruptcy are 75%.

"Both can survive on their own for the foreseeable future," he said, "but over the long run, each would erode in their competitive positions."

hugo.martin@latimes.com

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Susan Rice withdraws from Secretary of State consideration

WASHINGTON – Susan Rice, who came under heavy criticism for her defense of the Obama administration after armed militants killed four Americans in Benghazi, Libya, withdrew her name from consideration for secretary of State on Thursday as the president began to narrow his choices for key Cabinet positions.

“If nominated, I am now convinced that the confirmation process would be lengthy, disruptive and costly – to you and to our most pressing national and international priorities,” Rice wrote in a one-page letter to President Obama. “That tradeoff is simply not worth it to our country.”

In a statement, Obama praised Rice, who is the U.S. ambassador to the United Nations, as a key member of his Cabinet and “an advisor and friend.”

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“While I deeply regret the unfair and misleading attacks on Susan Rice in recent weeks, her decision demonstrates the strength of her character, and an admirable commitment to rise above the politics of the moment to put our national interests first,” Obama said.

The decision leaves Sen. John Kerry (D-Mass.) as the leading contender to head the State Department after Hillary Rodham Clinton steps down early next year. That, in turn, would require a special election in Massachusetts and likely give Scott Brown, a moderate Republican who lost his Senate seat to Democrat Elizabeth Warren in November, another chance to run.  

White House aides said the president also is now likely to choose either Chuck Hagel, a Republican and former U.S. senator from Nebraska, or Michele Flournoy, formerly the highest-ranking woman at the Defense Department, to replace Leon E. Panetta as secretary of Defense. If nominated, Flournoy would be the first woman to run the Pentagon.

Rice drew flak after she appeared on several Sunday TV talk shows five days after militants stormed a U.S. diplomatic mission in Benghazi in eastern Libya on Sept. 11, killing U.S. Ambassador J. Christopher Stevens and three other Americans.

Although Rice relied on so-called talking points given to her by the CIA, a number of Republican lawmakers said she had falsely described the attacks as spontaneous protests and not a calculated act of terrorism by Libyan extremists. Critics said she had tried to downplay the nature of the attacks to protect Obama during his reelection campaign.

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Rice later agreed that her statements were incorrect, but blamed the information she was given by the intelligence community. It did little to stanch the criticism, however.

As speculation grew that Rice was a likely candidate to replace Clinton, she tried to disarm her sharpest critics by meeting senior Republicans in closed-door meetings on Capitol Hill. But Sens. Lindsey Graham (R-S.C.), John McCain (R-Ariz.) and Susan Collins (R-Maine) all said they were dissatisfied, putting her expected nomination in jeopardy.

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[For the Record, 2:27 p.m. PST  Dec. 13: This post originally referred to Michele Flournoy as the current highest-ranking woman at the Defense Department, a position she formerly held before aiding Obama's reelection campaign.]

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Adele, Carly Rae top music; Birds rule 2012 apps

NEW YORK (AP) — It may be 2012, but it's a repeat of 2011 for Adele: Once again, she has the year's top-selling album on iTunes.

Her "21," which recently passed the 10 million mark in sales, topped the list even though it was first released in January 2011. It remained popular this year, particularly after she nabbed six Grammy Awards in February.

Coming in second was Taylor Swift's "Red," which wasn't released until October. Rounding out the top five: Mumford & Sons' "Babel," One Direction's "Up All Night" and fun.'s "Some Nights."

Carly Rae Jepsen had the song of the year with "Call Me Maybe" — and so it was also tops on iTunes, followed by Goyte's "Somebody That I Used to Know," fun.'s "We Are Young," Maroon 5's "Payphone" with Wiz Khalifa and Nicki Minaj's "Starships."

In the world of apps, "Angry Birds Space" was king of the top-paid iPhone and iPad apps, while those looking for freebies made YouTube the top iPhone app and Skype the most popular iPad app.

The top-selling movie was "The Hunger Games"; the best-selling TV show was an episode of "The Walking Dead" from season three; and the top TV series purchased for a season and a season's pass was "Downton Abbey," season two.

The erotic sensation "Fifty Shades of Grey" was the top-paid fiction book, followed by the rest of the trilogy in the next two slots. The best-selling nonfiction book was Mark Owen and Kevin Maurer's "No Easy Day," about the killing of Osama bin Laden.

The iTunes store is also playing tastemaker once again, determining its own "best of" lists. Frank Ocean was named top artist, while the Grizzly Bear's "Shields" was named best album and fun.'s "We Are Young" was named best song. Other iTunes bests: Action Movie FX was named iPhone app of year, "Breaking Bad" as best TV show and "The Avengers" as the "best blockbuster."

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Online:

http://www.apple.com/iTunes

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World’s Population Living Longer, New Report Suggests

A sharp decline in deaths from malnutrition and diseases like measles and tuberculosis has caused a shift in global mortality patterns over the past 20 years, according to a new report, with far more of the world’s population now living into old age and dying from diseases more associated with rich countries, like cancer and heart disease.

The shift reflects improvements in sanitation, medical services and access to food throughout the developing world, as well as the success of broad public health efforts like vaccine programs. The results are dramatic: infant mortality has declined by more than half between 1990 and 2010, and malnutrition, the No. 1 risk factor for death and years of life lost in 1990, has fallen to No. 8.

At the same time, chronic diseases like cancer now account for about two out of every three deaths worldwide, up from just over half in 1990. Eight million people died of cancer in 2010, 38 percent more than in 1990. Diabetes claimed 1.3 million lives in 2010, double the number in 1990.

But while developing countries made big strides – the average age of death in Brazil and Paraguay, for example, jumped to 63 in 2010, up from 28 in 1970 – the United States stagnated. American women registered the smallest gains in life expectancy of all high-income countries between 1990 and 2010. The two years of life they gained was less than in Cyprus, where women gained 2.3 years of life, and Canada, where women gained 2.4 years. The slow increase caused American women to fall to 36th place in the report’s global ranking of life expectancy, down from 22nd in 1990.

“It’s alarming just how little progress there has been for women in the United States,” said Christopher Murray, director of the Institute for Health Metrics and Evaluation, a health research organization financed by the Bill and Melinda Gates Foundation at the University of Washington that coordinated the report. Rising rates of obesity among American women and the legacy of smoking, a habit women in this country formed later than men, are among the factors contributing to the stagnation, he said.

The World Health Organization issued a statement Thursday saying that some of the estimates in the report differ substantially from those done by United Nations agencies, though others are similar. All comprehensive estimates of global mortality rely heavily on statistical modeling because only 34 countries – representing about 15 percent of the world’s population – produce quality cause-of-death data.

Health experts from more than 300 institutions contributed to the report, which measured disease and mortality for populations in more than 180 countries. It was published Thursday in the Lancet, a British health publication.

The one exception to the trend was sub-Saharan Africa, where infectious diseases, childhood illnesses and maternal causes of death still account for about 70 percent of all illness. In contrast, they account for just one-third in South Asia, and less than a fifth in all other regions. Sub-Saharan Africa also lagged in mortality gains, with the average age of death there rising by fewer than 10 years from 1970 to 2010, compared with a more than 25-year increase in Latin America, Asia and North Africa.

The change means that people are living longer, an outcome that public health experts praised. But it also raises troubling questions. Behavior affects people’s risks of developing noncommunicable diseases like cancer, heart disease and diabetes, and public health experts say it is far harder to get people to change their ways than to administer a vaccine that protects children from an infectious disease like measles.

“Adult mortality is a much harder task for the public health systems in the world,” said Colin Mathers, a senior scientist at the World Health Organization in Geneva. “It’s not something that medical services can address as easily.”

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Push for minimum wage hike intensifies as worker ranks swell

NEW YORK — Before the recession, Amie Crawford was an interior designer, earning $50,000 a year patterning baths and cabinets for architectural firms.

Now, she's a "team member" at the Protein Bar in Chicago, where she makes $8.50 an hour, slightly more than minimum wage. It was the only job she could find after months of looking. Crawford, now 56, says she needed to take the job to stop the hemorrhaging of her retirement accounts.

In her spare time, Crawford works with a Chicago group called Action Now, which is staging protests to raise the minimum wage in a state where it hasn't been raised since 2006.

"Thousands of workers in Chicago, let alone in the rest of the country, deserve to have a livable wage, and I truly believe that when someone is given a livable wage, that is going to bolster growth in communities," she said.

If it seems that workers such as Crawford are more prevalent these days, protesting outside stores including Wal-Mart, McDonald's and Wendy's to call for higher wages, it may be because there are more workers in these jobs than there were a few years ago.

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Of the 1.9 million jobs created during the recovery, 43% of them have been in the low-wage industries of retail, food services and employment services, whose workforces include temporary employees who often work part time and without benefits or health insurance, according to a study by Annette Bernhardt, policy co-director of the National Employment Law Project in New York.

At the same time, many workers such as Crawford who have been displaced from their jobs are experiencing significant earnings losses after getting a new job. About one-third of the 3 million workers displaced from their jobs from 2009 to 2011 and then reemployed said their earnings had dropped 20% or more, according to the Bureau of Labor Statistics.

"What these protests are signaling are that working families are at breaking point after three decades of rising inequality and stagnant wages," Bernhardt said.

The rise of low-paying jobs in the recovery, experts said, has cut the spending power of workers who once worked in middle-class occupations. Construction workers who made $30 an hour, for example, during the housing boom may now find themselves working on a temporary basis.

"You see workers trading down their living standards," said Joseph Brusuelas, a senior economist for Bloomberg who studies the U.S. economy.

Now, Brusuelas said, there's an oversupply of workers and they're willing to take any job in a sluggish economy, even if they're overqualified. That includes temporary jobs without benefits, and minimum wage positions such as the one Crawford took.

Although the 2012 election might have brought the idea of income inequality to the forefront of voters' minds, efforts to increase wages for these workers are sputtering in an era of austerity when businesses say they are barely hiring, much less paying workers more.

The New Jersey state legislature handed Gov. Chris Christie a bill to raise the state's minimum wage to $8.50 an hour from the federal minimum of $7.25 this month, but he hasn't signed it and has signaled he might not. An earlier effort in New Jersey to tie the minimum wage to the consumer price index was vetoed by the governor.

Democratic lawmakers in Illinois are also trying to push a bill that would increase the minimum wage — an earlier effort this year failed. The Legislature last voted to raise its minimum wage in 2006, before the recession, and the governor agreed.

"A higher minimum wage means a person has to pay more for each worker," said Ted Dabrowski, vice president of policy at the Illinois Policy Institute, which opposes raising the minimum wage. "Companies have a few choices — increase prices, reduce the number of people they hire, cut employee hours or reduce benefits. When employees become too expensive, they have no choice but to reduce the number of workers."

The Center for Economic and Policy Research in Washington, D.C., however, says there is little indication from economic research that increases in the minimum wage lead to lower employment, and, because higher wages mean workers have more money to spend, employment can actually increase.

A bill to raise the federal minimum wage was introduced to the U.S. Senate by Tom Harkin (D-Iowa) in July and referred to committee, where it has sat ever since.

"Business lobbyists are aware of the campaign and are aggressively working to stop it," said Madeline Talbott, the former lead organizer of Chicago's Action Now. "We've had a hard time getting our legislature to approve it."

But Talbott and other advocates say that the protests that have spread throughout Illinois and the country in recent weeks might force the issue to its head.

"You saw it happening 18 months ago when Occupy started — workers are now realizing that they have rights too in the workplace," said Camille Rivera, executive director of United NY, one of the groups working to raise the minimum wage in New York. "It's a good time for us to be fighting these issues, when companies are making millions of dollars in profits."

The protests are bringing out people who might not usually participate, including Marcus Rose, 33. Rose, who has worked the grill at a Wendy's for 21/2 months, was marching outside that Wendy's in Brooklyn recently on a day of protests, responding as organizers shouted lines such as "Wendy's, Wendy's, can't you see, $7.25 is not for me."

"If you don't stand up for nothing, you can't fall for anything," he said.

Talbott, the Action Now organizer, says that people such as Rose may make a difference in whether lawmakers at the state and national level will listen to the protests. The Obama victory energized the working class to believe that they could fight against big-money interests and win, she said.

"It comes down to the traditional situation — whether the power is in the hands of organized money or of organized people," she said. "The organized money side tends to win, but it doesn't have to win. The more people you are, the more chance you have against money."

alana.semuels@latimes.com

ricardo.lopez2@latimes.com

Semuels reported from New York and Lopez from Los Angeles

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Gov. Jerry Brown being treated for prostate cancer

California Governor Jerry Brown walks off stage after addressing supporters of Proposition 30 and 32 at the Sheraton Hotel in Sacramento. (Wally Skalij / Los Angeles Times / November 6, 2012)

By Times Staff

December 12, 2012, 3:20 p.m.

The office of Gov. Jerry Brown announced Wednesday that California's chief executive is being treated for prostate cancer.

Dr. Eric Small, Brown’s oncologist at UC San Francisco, said in a statement that the governor is undergoing a short course of "conventional radiotherapy."

"Fortunately, this is early stage localized prostate cancer," Small said. "The prognosis is excellent, and there are not expected to be any significant side effects.”

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Shhhh! A new law says TV ads can't blare anymore

NEW YORK (AP) — TV viewing could soon sound a little calmer. The CALM Act, which limits the volume of TV commercials, goes into effect on Thursday.

CALM stands for Commercial Advertisement Loudness Mitigation. The act is designed to prevent TV commercials from blaring at louder volumes than the program content they accompany. The rules govern broadcasters as well as cable and satellite operators.

The rules are meant to protect viewers from excessively loud commercials.

The Federal Communications Commission adopted the rules a year ago, but gave the industry a one-year grace period to adopt them.

Suspected violations can be reported by the public to the FCC on its website.

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Online: www.fcc.gov

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Indianapolis to replace fleet with electric, hybrid vehicles

Indianapolis wants to become the first major city to replace its entire fleet with electric and plug-in hybrid vehicles.

Mayor Greg Ballard signed an executive order Wednesday mandating that the city replace its current sedans with electric vehicles. The city will also work with the private sector to phase in snow plows, fire trucks and other heavy vehicles that run on compressed natural gas, and it will ask automakers to develop a plug-in hybrid police car because one doesn't yet exist.

The city hopes to complete the switch by 2025.

Ballard hopes that in making the switch, Indianapolis will help the country reduce its dependence on foreign oil. City spokesman Marc Lotter said the mayor considers it an issue of national security.

"The United States' current transportation energy model, driven by oil, exacts an enormous cost financially and in terms of strategic leverage," Ballard, a retired Marine officer and Gulf War veteran, said in a statement. "Our oil dependence in some cases places the fruits of our labor into the hands of dictators united against the people of the United States."

The city fleet includes 500 non-police vehicles, and the police car switch alone has the potential to save taxpayers $10 million a year in fuel costs, the statement from the mayor's office said.

Lotter did not provide an estimate on the cost of the change. The new vehicles will be purchased as older vehicles are retired. He said the city buys about 50 non-police vehicles every year.

"We are negotiating with the automakers and several international capital fleet firms to get the best deal possible for taxpayers," Lotter said.

City officials and the U.S. Conference of Mayors have researched the issue and found that no other major U.S. city has announced it will convert its entire fleet.

"From everything we know, we are the first city in the nation to take this step," Lotter said.

The Indianapolis area has 200 charging stations, and Lotter said the city is working with private companies to develop more.

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Police Commission eases LAPD's illegal immigrant policy

The Los Angeles Police Commission on Tuesday approved a plan from Los Angeles Police Department Chief Charlie Beck to no longer turn over illegal immigrants arrested in low-level crimes to federal authorities for deportation.

The new rules, which are expected to go into effect early next month and affect about 400 people arrested each year, mark a significant move by the state's most influential local police agency to distance itself from federal immigration policies that Beck has said unfairly affects undocumented immigrants who are caught committing petty offenses.

For years, police departments have sent fingerprint information on every person arrested to Immigration and Customs Enforcement officials. Federal officials, in turn, use the fingerprints to identify people suspected of being in the country illegally and often ask local agencies to put a 48-hour hold -- a detainer in law enforcement jargon -- on people.

These detainers authorized police to keep suspected illegal immigrants in custody for 48 hours longer than they otherwise would have been held in order to give ICE officials time to take them into federal custody.

Until now, the LAPD honored all ICE detainer requests, regardless of what offense the person was suspected of committing. When Beck announced the outline of his plan in October, he said he supported the basic idea of cooperating with federal officials, but believed ICE officials had failed to distinguish between violent criminals and those accused of low-level offenses.

Under the terms of the new policy, the LAPD will continue to honor detainer requests for anyone arrested on suspicion of a felony offense, a misdemeanor charge with a bail above $5,000, or a vehicle violation with a bail of more than $2,500, according to a report presented to the commission at a meeting Tuesday. Documented gang members and people with previous felony convictions will also be detained regardless of their offense.

Otherwise, unless ICE officials can spell out special circumstances that require someone be held, the department will release people after they have been booked and ordered to appear in court for the alleged crime.

Several immigrant-rights advocates spoke out against the plan, claiming it did not do enough to protect illegal immigrants.

Commissioner John Mack called the plan "an enlightened first step," telling the critics that the policy "was not set in stone" and may be revised again in the future if police officials believe it is warranted.

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Lawsuit claims A&E's 'Storage Wars' show is rigged

LOS ANGELES (AP) — Some of the valuables found hidden in abandoned lockers on A&E's "Storage Wars" have been added by producers to deceive viewers, a former cast member of the show claims in a lawsuit filed Tuesday.

David Hester's suit claims producers have added a BMW Mini and newspapers chronicling Elvis Presley's death to lockers in order to build drama for the show and that his complaints about the practices led to his firing.

Hester is seeking more than $750,000 in his wrongful termination, breach of contract and unfair business practices lawsuit. A&E Television Network declined comment, citing the pending lawsuit.

"Storage Wars" follows buyers who bid for abandoned storage lockers hoping to find valuables tucked inside.

"A&E regularly plants valuable items or memorabilia," the lawsuit states. Hester's suit claims he was fired from participating in the series' fourth season after expressing concerns that manipulating the storage lockers for the sake of the show was illegal.

He claims that producers stopped adding items to his units after his initial complaints but continued the practice for other series participants. The lawsuit alleges entire units have been staged and the practice may violate a federal law intended to prevent viewers from being deceived when watching a show involving intellectual skills.

"Storage Wars" depicts buyers having only a few moments to look into an abandoned unit before deciding on whether to bid on it at auction. The lawsuit claims some of the auction footage on the show is staged.

Hester, known as "The Mogul" on the show, has been buying abandoned storage units and re-selling their contents for 26 years, according to the suit.

Nielsen Co. has ranked "Storage Wars" among cable television's top-ranked shows several times since its 2010 debut.

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