WorldCom Sells Intermedia Unit, Unemployment Claims Rise, and United Airlines Cuts Staff

Strategic Insights -

In a recent development, WorldCom Inc. has agreed to sell its Internet assets to Allegiance Telecom Inc., meeting a requirement related to its acquisition of Intermedia Communications Inc. of Tampa last year. The sale comes after U.S. regulators required WorldCom to dispose of some of Intermedia's assets as part of the deal. Allegiance, which provides phone and Web service to businesses, gains an Internet network, customers, and employees. Meanwhile, new claims for unemployment insurance have surged for the second week in a row, with a seasonally adjusted increase of 36,000 to 447,000 for the work week ended Dec. 29. Additionally, United Airlines has announced plans to close five U.S. reservations offices and lay off 899 employees due to reduced flights and lower sales following the Sept. 11 attacks.

Key Takeaways:

  • WorldCom Inc. has agreed to sell its Internet assets to Allegiance Telecom Inc., satisfying a requirement related to its acquisition of Intermedia Communications Inc. of Tampa.
  • Allegiance gains an Internet network, customers, and employees, as well as employees, after the sale.
  • New claims for unemployment insurance have surged to 447,000 for the work week ended Dec. 29, an increase of 36,000 from the previous week.
  • The four-week moving average of claims fell to 409,750, its lowest level since Sept. 1.
  • United Airlines will close five U.S. reservations offices and lay off 899 employees due to reduced flights and lower sales following the Sept. 11 attacks.
  • Four of the offices to be closed are in California, and the fifth is in Illinois.
  • Some of the workers may be eligible to relocate to other offices.

Statistics:

  • 36,000: increase in new claims for unemployment insurance for the work week ended Dec. 29 (Labor Department).
  • 447,000: number of new claims for unemployment insurance for the work week ended Dec. 29 (Labor Department).
  • 409,750: four-week moving average of claims, the lowest level since Sept. 1 (Labor Department).
  • 23%: reduction in United Airlines' flight and seat capacity (United Airlines).
  • 19,000: number of employees laid off by United Airlines since Sept. 11 (United Airlines).

Sources:

  • The Gazette (WorldCom sells Intermedia unit: Allied Telecom buys Internet assets)
  • The Gazette (Jobless claims rise for the second week in a row)
  • United Airlines press release (LAYOFFS AND CLOSURES)