high with a big merger on the horizon. how the company once left for dead has managed to rise up again. plus, where the deal between united and continental airlines would leave employees. and...b-p's reputation taking a hit....due to the oil spill in the gulf of mexico. what the company must do to contain the fallout. these stories and more on today's first business. you're watching first business. financial news, analysis and

today's investment ideas. good morning everyone, its wednesday, may 5th, 2010. and the european e t f, exchange traded funds, practically falling off a cliff this week. and now europe struggles, finally catching up to the united states stock market. we've seen the largest sell-off in the dow in about three months. the question is, is the sell-off gonna continue, angie? the oil spill still a major story. now the insurance and reinsurance companies are starting to add up the losses. which come to $900 million, beejal. and numbers keep going higher, angie. and days after that blockbuster merger between united and continental. both those stocks down 10% yesterday alone. other airline stocks saw a big drop this week as well. left for nearly dead. united airlines has risen from the ashes of chapter 11 bankruptcy to secure it's ranking as the world's largest airline by merging with continental. the $3.2 billion dollar stock deal is expected to be completed by the 4th quarter of 2010. but already, united is winning the title of come back kid.

it could not have been much worse. in short, united faced turbulence times with a slow down in business travel because of 9-11, pay raises for it's pilots, skyrocketing oil prices, a loss of $2.4 billion dollars, and the inablitily to raise capital. all which caused the company to crash land in chapter 11 bankruptcy in december 2002. "every airline in this country similar to our own, they have gone through a wrenching difficult restructuring to put them back on the path to some profitability." "it was a very poorly run company. they lost all their flexibility on buying futures on oil, so they got caught on the highside of the barrell didn't have." university of illinois at chicago marketing professor david khoeler is tracking the united story--believes the turnaround happened through layoffs, reducing routes, union concessions and hiring of glenn tilton in sept of 2002. "and i think it's easier when

you bring in someone from the outside that can make the hard choices because there is no allegence there and obviously he's the toast of the town now." as tilton, the ceo and president of united, drinks in the spotlight with continentals chairman, president and ceo jeff smisek. khoeler gives creedance to united employees. "the employees really pushed the thing over the edge. they were willing to make the concessions that allowed them to gain the flexibility and liquidity to get out of the hole and second of all make an accqsuition." iinvestors have also been on board.united stock has soared from $3 to a high of $23 over the past year. with the stock doubling as the economy improved and united positioned for a merger. passengers question whether the company's air fares will also rise. instead the company officials contend with very few overlaping routes -- united and continental will expand business and the market, which includes low cost carries, will continue to set ticket prices. "theres not a single airfare increase built into our synergy models absolutely not." "i think united is in a good position to say we now are the airline for the world." if all goes smoothly, united will have flights to 59

countrys. and hopes are high the combined airline will generate more frequent fliers. "the question for united airlines in 2001 and 2002 was what way forward? as the mayor said we had a vision,and that vision looked like today. but it was a lot of hard work to get from that day we filed for the protection of the court here in this city to get to this day. united shareholders are expected to own 55% of the combined company and continental owning 45%. coming up later in the show-- beejal talks with the spokesman for the united pilots. and let's get right to scott shellady / gfi group. and scott, we've known about the greek fiscal crisis and the euro zone fiscal troubles. why is it just now rattling u.s. investors? well i think the most significant thing about what's happening with the greek euro zone bailout is the fact that a few people have done the

math overnight. and the 110 billion euros that they've been loaned over a three-year period, isn't gonna quite cut the mustard. so, if you see that, if it's just greece, maybe that's not the problem. but as all of those guns have now focused on spain, and then ireland. portugal, and even the u.k., the credit defaults swaps have jumped significantly today. i think that that's what's happening is it's not just going to be greece. who's going to be next? could it be spain? i think it's a great example of how our imagination is our own worst enemy. ok, and you think this is gonna turn out to be a bigger sell-off and equities then it is right now? well because we've come so high, so fast. had we slowly but surely built up this equity rally, which is stemming back to earlier last year, maybe not. but, because we've done so much work, so quickly in percentage terms. we do have a little bit of a chance here for a decent break. but it's not gonna be the beginning of the end again. ok, thank you very much.

the question of "jail time" for wall street executives who commit fraud is being raised in the senate. fines are the usual punishment for white collar crimes in the financial industry-- but now senators are thinking about kicking it up a notch. lawmakers could vote on an amendment as they debate financial reform. at hearing tuesday-- the director of the consumer federation of america investors protection pushed for new and stronger punishments for wall street executives and others who fail to give full disclosures to clients. "fines are rarely going to be heavy enough to serve as a true deterrent. holding out the possibility of jail time for violations has the potential to provide that deterrent." an attorney who spoke at the hearing claims there are already enough laws on the books ... and suggests the justice department and s-e-c need to be more vigilent with the tools they already have to catch criminal activity. people on wall street are said to opposed the idea of jail time. but want a more transparent financial system.

can bp recover from the worst disaster in its's company's history? but first...labor issues at stake after the blockbuster united / contintental merger deal... that's next.

for the announced 3-billion dollar merger of united and continental to be a success, union issues will need to be addressed. approximately 61 percent of continental and 82 percent of united employees are unionized. "the unions have been through a tough 8-9 years. forced to do givebacks, furloughs and to play ball with management on terms stacked against them. but right now there's optimism again, so unions are looking to make some gains back." in a sign that organized labor may be open to the deal, two labor leaders who sit on united's board voted in favor of the merger. the successful combination northwest airlines with delta could also provide a roadmap for negotiations with seperate labor groups representing pilots... flight attendants.... and machinists. but current united head glenn tilton warned that any labor agreements would be focused on the new united.

"we'll model our negotiations with our employees based on what's best for our company; not what's best for any other company. tilton and continental c-e-o jeff smisek will chair an integration committee to work through union and jobs issues. thanks paul - the merger between united and continental could mean thousands of jobs are on the line... and both airlines need the support of their own employees in order to make this work. captain herb hunter, spokesman for the united pilots is here to talk about what's at stake. welcome to the show herb. thanks for being here. so does this merger have the support of most of the employees? i can't speak for most of them. i think that there are a lot of people that see a lot of potential in this deal. i know from a pilot's perspective, there's a lot possible synergies. and we've read about that in the paper and we know companies that are out there. the key is how we go down this road. and basically there are two models out there

that they can follow in recent history. one is the america west and u.s. air model. which did not get the employees on board before hand. they had a lot of trouble. and seniority to a pilot is everything. that's your whole life. but, on the other hand as the delta and northwest model. they did get the employees on board. they're doing great. the are ahead of where they anticipated being. so, i believe if they make the right decision, it will work are really well. it would be tragic if they didn't. now united and continental did not get all of the unions on board before announcing this deal, right? they haven't yet. but they just announced it. we could see it coming, most people could. so they can still work with as if they want. the only concern in fact in the last couple days in the press is a couple comments that they have made. saying that they don't ally need the employees on board to do this. they're right legally, they don't. but, i think operationally it would be a big mistake to not include employees. do you think there will be pilots that will lose their job? no. both on united and the continental side? i

don't think so. i think the job cuts that i've seen them talk about are probably some middle level management positions. and probably some people in-house that run the staffs where the bases are. now that base is going to move to chicago which will probably add jobs in chicago. as far as pilots go, we've got 1437 pilots furloughed, laid off, on the street right now. continental has 147. so we've lost people. if i'm reading the numbers correctly month end of this has the synergy possibilities that there talk about. i can see them growing. and so i think we would be calling people back. at least that's what we hope so. loss of jobs, we don't want to see that. ok, now there are two different labor agreements involved here. one under united, one under continental. how big of a challenge is that going to be to combine those, and what's going to be involved in that? it is a challenge. now on the good side, at least from our unions perspective. we have talked to the continental pilots. in fact we've been talking on and off for the last couple of years. because this has been rumored for a couple of years. in fact there were a couple of times

where it looked like the deal was done. of course, it wasn't. yesterday, they announced the deal. moving ané getting these people to work together is part of the problem. and with delta and northwest, they worked out that seniority and a matching before then they announced the deal. they knew how they were born to progress. that wasn't the case at u.s. air, and it created a problem. so, it's a big job. there's an old saying in the mergers that if a merger works properly, everybody's going to be upset. well, the key is fairness. fairness to both sides. continental has some very junior pilots who are captains still on the property. we have guys who are senior them, on the street furloughed. so, that would have to be addressed. ok, so when negotiating with these airlines do you think pilots. what will you guys be asking for as far as pay issues? pay issues. we have never been willing to negotiate in the press. but, i will say this, i think a good starting point would be where the delta and northwest contract is. that's a good place to start. times have changed, hopefully the economy is turning a round. we gave up a lot at united with

basically a gun and our head, going through bankruptcy. continental gave up a lot to, but they negotiated through some of the tough times. we would like to see a turnaround. we were on board with the company when they were using the term shared sacrifice. we were there, we gave, we gave. half of our pay, all of our pension, a lot of fringe benefits. we believe that it's time now to also share in the reward. and there's gonna be, if the synergies are out there. and if you believe the wall street journal and chicago tribune, there are $1.2 billion of synergy per year to be gained out there. that should allow all of us to do well. real quick, is bigger necessarily better when it comes to operation services and even special customer services? bigger could be worse if it's not worked together properly. so no, bigger isn't always better. quality always has an emphasis. and of course we want to run a quality airline. united has tried to run a quality airline, at least from the employee's point of view. we've done that. we show up for work and we're very safe. we have a great

record of safety in the history of aviation business. and i think all of our employee groups tried very hard for that. sometimes it's tough, you get beat down emotionally. so, a lot people wanna be hopeful now and that there's a lot to be a hopeful for. looking on potential. how will it work out remains to be seen. ok, thank you so much for your thoughts on this issue. we appreciate it. capt. herb hunter, spokesman for the united pilots. b-p's handling of the massive oil spill in the gulf of mexico...a look at potential damage to the company's image.

the massive oil spill in the gulf of mexico is a major setback for oil company bp. the longer it goes on, the bigger the hit to bp's image. nick kalm is an expert on corporate reputation, and he's here to talk about it. welcome to the show. good to have you again. and the cleanup efforts have certainly been very difficult. even federal officials say bp needs to put more resources into the situation. and that alone you would think, would be a hit to bp's image. absolutely, they talked very openly about having 2500 employees on the ground

there, on their web site. but clearly more needs to be done. there are a huge company, so they need to put in more resources. it would certainly be good if they did that without having to be asked by the federal government to do it. but in this case, at least they're following what they're being asked to do. and we also want to point out, that there are other companies involved in this. trans ocean that owned the drilling rig that caught on fire and malfunctioned. halliburton as well. but yet, this is still shaping up to be a situation where bp is taking most of the blame. absolutely, and their actually in a very good way accepting the responsibility for it. their chief executive is talk about how its his oil, his company's oil. even though it wasn't their rig, they're doing the right thing in taking responsibility for it. and for that, they should be commended. ok, is there anything else that bp is doing a good job on? or is doing right? oh, absolutely. they're doing a good job. and these days, when you have this kind of a crisisyou need to be making good use of social media. and they're doing that, that's very positive. as i said, that taking responsibility has been a positive thing as well. and

devoting appropriate resources to figuring out what the problem is. they've been putting press releases out on a regular basis, that's good. they haven't gone silent the way some companies when they're in the midst of a crisis. so they're certainly, putting their top executives in front of the media too, which again is all very positive. yeah, but what do you think bp is not doing? what does it yet have to do? well, i'm just surprised that they haven't done things like take out full- page ads in the major newspapers to really reiterate what they're doing in their position. because a lot of it is getting lost in the shuffle. they should also have, they had their executives out there a couple of times, since this bill really began. but i think there should be daily press briefings updating people on what they're doing. the other thing is, they should have major points in the media recapping what it is that there doing and how seriously they're taking it. and what do you think of the fallout is? what are the consequences to this damage to bp's reputation? well i think it's quite serious, but at the same time i think the

fact that they're doing so many of the right things. i think, what it all shakes out and it shows that it wasn't necessarily their fault this spill occurred. i think they're going to be ok. part of the issue is that these kind spills really don't happen every day. we're fortunate that they don't. it was really back to the exxon-valdez 21 years ago. we had a spill of this consequence going on in any u.s. waters. yeah, and as far as the retail operations. we see bp's logo, sometimes we go to a gas station to fill up or gas. do you think at that level, do you think it can make people think twice and say, 'wait a minute maybe i don't want to go to bp's gas station and fill up'? absolutely, and i think there's any number of people who are going to do react that way. there's also a number of people who are hopefully paying attention to what the company is doing. and that they're trying to do the right thing in terms of addressing the problems. and even going a bit

above and beyond what one would think would be their normal responsibilities. and they might actually win some converts that way. so, they're gonna lose some from people who frankly don't like big oil companies to begin with. and may not like the way the company is handling it. but, they'll probably pick up some supporters as well. and i think by and large, they've really done a lot of the right things. yeah, there's lots of lessons learned here. for other companies as well. indeed. and i think one of the biggest ones is if you think about it. bp, probably the biggest thing to fault them on is to look back. and it's easy for all of us, as monday morning quarterbacks to look back. they spent close to 300 + million-dollars on the whole of beyond petroleum advertising effort that they've done. there really haven't done anything during their whole course of the last ten years since that advertisers been running. talked about how hard it is to find oil. what a difficult job it is. and the fact that sometimes things can happened that are negative. so, people take for granted the fact that you just go to a gas station in there's gas there. but it takes a lot of time and effort and money to make sure that you are able to extract that petroleum and turn it into the gasoline we all use to get around. and thank you for pointing that out. nick kalm of reputation partners.

is volatility in the stock market here to stay? dan deming is in chart talk next...after this in-the-know message.

get ready everybody, it could be another wild ride for the markets today. we are bringing in dan dan deming/stutland equities. and dan, what a crazy day in the markets yesterday. and how about the vix? yeah, the vix, a big jump in the vix. we saw a 20% jump up in the vix. trading in the mid-20s again. certainly, elevated realize volatility in the marketplace. we're getting significant moves. we saw the s&p move actually 2 1/2% at one point yesterday. we're also seen the s&p breakdown here below again 1183. which was kind of the support

level. tested at the 50 day moving average yesterday. held above it and right now that's kind of the area that everybody's gonna be looking for. if you break below 1168, we could go down to 1150 angela. so that's what the chart says, but what is your trader instinct here? because you have been talking about a downward move. is this the big one? is this the beginning of something larger to happen? well it's hard to say angela. but right now, if you had to play the odds, i suppose giving the condition in the marketplace. this is a potential for the correction. and the reason i say that is a couple of reasons. not only the euro zone, what's going on there. all but also seeing a lot of the shorts covering coming out of the marketplace. and that's what's artificially holding the market up. so, i think you got a lot less shorts in the marketplace. that kind of balances the playing field a little bit. and right now the momentum has turned and there's more momentum on the downside currently. thank you very much. have a great trading day dan. well thanks so much for watching

everyone. remember, we're gearing up for our viewer mail segment coming up friday morning. so call us at (312)660-8397 or you can e-mail us at comments at firstbusinessnews.com. we'll see you tomorrow.