Continental Airlines says it is forming an alliance with United Airlines to link their networks and services worldwide, hoping to offset rising fuel costs. Continental and United said it will join United’s Star Alliance. Under alliances, airlines work together to sell tickets on each other’s flights. They can result in increased revenue. Alliances have their limits, though. Without antitrust immunity from regulators, airlines are barred from working together on prices and schedules. Houston-based Continental has considered but rejected a bolder step, combining its operations with UAL Corporation’s United Airlines, but walked away from deal talks last month, saying it preferred to remain independent.
A huge crackdown is under way on mortgage fraud that officials say has contributed to the country’s massive housing crunch. The FBI says it has arrested more than 400 real estate industry figures since March–including dozens over the last two days. Among those apprehended are two former Bear Stearns managers in New York–the first executives to face criminal charges related to the collapse of the subprime mortgage market. Authorities say more than 400 people are being charged in the sting that began March 1st and ended this week. They include industry borrowers, loan originators and real estate agents.
Iraq’s oil ministry says Baghdad is close to signing deals with several major western companies in an effort to boost its output capacity. They’d be the first major Iraqi contracts with big western companies since the 2003 U.S.-led invasion. The deals, once signed, are something of a stopgap measure to help Iraq begin to increase production. The government is still trying to approve a new national oil law but it’s being held up by political squabbles among Sunnis, Shiites and Kurds. The deals could also mark the beginning of an important long-term toehold by big western companies into Iraq’s potentially lucrative oil industry. The deals would give the western firms a bidding advantage over other companies in the future. Iraq’s oil ministry spokesman would not name the companies. But the New York Times says ExxonMobil, Shell, Total, BP, Chevron and a number of smaller companies have been in talks with Iraq’s oil ministry.
The most powerful militant group in Nigeria says it launched a rare attack against an offshore oil installation early Thursday. And Royal Dutch Shell says it has now shut down production in the area. A leader of the movement for the Emancipation of the Niger Delta has told the Associated Press that militants attacked the Bonga oil field more than 65 miles from land. But they were not able to enter a computer control room that they had hoped to destroy in order to shut down production in the entire offshore field. The militant leader spoke on condition of anonymity to avoid punishment by authorities. A spokesman for Royal Dutch Shell confirms the attack but gives no details. He says production had been stopped from the field, which normally produces about 200,000 barrels of crude per day. It’s not clear for how long.
All but 89 claims against BP for the Texas City refinery explosion in 2005 have been settled, according to a BP attorney. A trial involving ten workers over injuries allegedly suffered in the blast continues in Galveston court.
The Conference Board’s Index of Leading Economic Indicators edged higher during May–another sign that the economy is likely to continue growing at a snail’s pace. The private business group says its forecast of future economic activity rose one-tenth of a percent–the same as April–matching expectations of economists surveyed by Thomson Financial. The index is designed to forecast economic activity in the next three to six months. It is based on ten components, including stock prices, building permits and initial claims for unemployment benefits.
Treasury Secretary Henry Paulson says recent turmoil in the market is evidence that the Federal Reserve needs more powers to regulate the financial system. Paulson says there’s a need to consider quickly how to give the Fed the power it needs to get information from investment banks and the responsibility to intervene to protect the overall financial system. The secretary points out that the troubles that led to the near collapse of Bear Stearns illustrate “the outdated nature of our financial regulatory system.” And he called for dramatically turning attention “to the fundamental needs of our system” and moving much more quickly to update the regulatory structure. Back in March, Paulson proposed giving the Fed more power to protect the stability of the entire financial system.