Airlines race ahead; Goodyear better on contract news; NorthWestern rises despite bankruptcy filing

By Carlise Newman

Chicago, Sept. 15 - Airlines had an even better day Monday than Friday, surging after United Express carrier SkyWest said it ordered C$1.2 billion in 3-seat jets from Bombardier Inc. The sector had been higher last week, when the U.S. marked the anniversary of the Sept. 11 tragedy, and traders attributed the rise to an improvement in activity this anniversary and an overall better feeling.

Montreal-based Bombardier said the SkyWest order includes options for 80 additional aircraft, which could increase the value of the deal to C$4.6 billion.

The news boosted the debt of SkyWest's bankrupt partner, UAL Corp. The United Airlines parent's 9¾ % notes due 2021 were seen at 18 bid, 20 offered, a rise of 3 points from Friday, a trader said. The bonds rose 5 points Thursday and 3 on Friday last week.

"Airlines have been doing pretty well lately. Whether it's because people are traveling more or as some kind of investor spite during 9/11, not sure. But today's news definitely helped out UAL," he said.

He said Delta Airlines Inc.'s bonds were up 2 points, led by the 8.30% notes due 2029 at 69 bid Monday. The paper had jumped 4 points Thursday and an additional 2 on Friday.

The trader also saw American Airlines parent AMR Corp.'s 9.73% notes due 2014 up 2 points at 61½ bid, 63¼ offered. AMR debt rose a total of 4 points between Thursday and Friday of last week.

Goodyear Tire & Rubber Co.'s bonds firmed Monday after the company's largest union, the United Steelworkers of America, said on Monday its members have approved a three-year contract that cuts wages and benefits and closes a plant in exchange for increased job security and a board seat.

The union said 70 % of members approved the pact, more than a 2-to-1 margin. It represents nearly 19,000 workers and 22,000 retirees.

Goodyear's benchmark 7 7/8% notes due 2011 "went out 83 bid, 84¾ offered" a trader said.

The Akron, Ohio-based tire company said there will be a conference call on Sept. 22 with analysts and reporters to discuss details of the savings on the news pact.

"The bonds were a little better on the news but there still isn't enough information on the agreement to have a big impact," a trader said.

Meanwhile, NorthWestern Corp. bonds surprisingly rose after the company said Monday it was filing for Chapter 11.

A trader said the 8¾% notes due 2012 and the 7 7/8 % notes due 2007 were quoted as having risen from the mid-70s, trading with accrued interest, to around 83 bid, trading flat (without accrued interest).

A trader suggested that the bonds rose because "the other shoe had fallen," as in, the bad news in the form of the bankruptcy filing is now behind them.

Elsewhere, Telewest Communications plc's bonds were up on the news the company has reached agreement in principle on the terms of its financial restructuring with the ad hoc committee of its bondholders, W.R. Huff Asset Management, the Liberty Media Group and IDT Corporation, and bondholders will receive 98.5 % of the company (see story elsewhere in this issue).

Telewest's 9 5/8% notes due 2006 were up 1 point to 46½ bid, a trader said.

The agreement allows the holders of the U.K.-based cable company's existing share capital to receive the remaining 1.5% of the issued share capital.

Conseco Inc. bonds were unchanged Monday, after the company last week emerged from bankruptcy.

The extended bonds closed the session at 98 bid, with the unextended bonds at 55 bid. The stock was down $0.16 or 0.79% to $20.13.

"My feeling is the bonds could only rally for so long on the emergence. I could be wrong, but today seemed to be good evidence of that, because we were relatively busy," a trader said.

The reemerging company is now focused strictly on its core insurance operations. In addition to approving Conseco's reorganization plan on Tuesday, a federal judge also approved a plan for Conseco Finance, which was split up and auctioned off to an investor group in March.

As the result of sale of units and internal reductions, the new Conseco has about 4,600 employees, down from more than 7,000 at the time of its bankruptcy filing last year.

Under terms of the agreement with its creditors, Conseco has emerged with about $1.4 billion in debt, down from $7 billion at the time of its filing.

Elsewhere, WorldCom Inc. was still "buzzing" Monday, a trader said. The bonds were up ½ point at 33 bid, 34 offered. MCI bonds were seen at 78¼ bid, 79½ offered, up ¾ of a point.

"They've been at the same high-20s, low-30s levels for a long, long time. It's good to see the paper heading toward mid-30s," he said.

Ashburn, Va.-based WorldCom said last week it reached an agreement with its creditor groups. Traders have said the new agreement brings WorldCom one step closer to emerging from bankruptcy, possibly earlier than expected.

Elsewhere, WestPoint Stevens Inc.'s 7 5/8% notes due 2005 were up 2 points to 24 bid, for a rise of 5 points in two days.

Polaroid Corp.'s 11½ % notes due 2006 firmed to 16¼ bid, 17¼ offered from 15 bid, 16 offered when they were last seen trading.

And Collins & Aikman Products Co.'s 11½% notes due 2006 were seen down 1½ points to 70 bid. The auto parts maker lost a large contract a few weeks ago, and the bonds have been pressured since.

(Paul Deckelman contributed to this report)

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