Pacific Northwest Taiwanese carrier China Airlines will drop its nonstop service between Seattle-Tacoma International Airport and Taipei...

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Pacific Northwest

Aviation

Taiwanese carrier China Airlines will drop its nonstop service between Seattle-Tacoma International Airport and Taipei as part of a move to cut 100 passenger flights per month mainly between the United States and Asia due to soaring fuel costs.

Flights will end after Sept. 1, said Robert Ha of Asia Travel in Seattle’s Chinatown International District. China Airlines flies four times a week between the two cities, he said.

EVA Airways will continue its five weekly nonstop flights linking Seattle and Taiwan with connections to other Asian cities.

A China Airlines spokesman couldn’t be reached for immediate comment, but Ha speculated that new competition on international routes to Taipei might have influenced its decision.

China Airlines started its Seattle service in 2004.

Beverages

Columbia warns of possible layoffs

Columbia Distributing, which distributes beer, wine and other beverages, notified all 933 employees at its Renton, Arlington, Ferndale and Vancouver, Wash., facilities that they may be laid off by September.

The notice follows last month’s announcement of the merger of Portland-based Columbia, Mount Hood Beverage and Gold River Distributing’s beer and nonalcoholic beverage-distribution businesses in Oregon and Washington.

Staffing plans at the combined company, named CoHo Distributing, “are still being decided,” said spokeswoman Lindy Bartell.

Software

Microsoft is sued over encryptions

Microsoft was sued by a closely held company for allegedly infringing two encryption patents in the Windows operating system.

Maz Technologies, based in Wilmington, Del., filed the lawsuit Tuesday in federal court in Tyler, Texas.

Microsoft uses the technology for encrypting and decoding documents in Windows XP Professional and all editions of Windows Vista, Maz claimed in the suit.

A Microsoft spokesman didn’t immediately return a call seeking comment.

Labor relations

Port workers expand slowdown

West Coast port workers, whose labor contract expired July 1, expanded slowdown tactics Tuesday in Los Angeles and Long Beach, Calif., cutting productivity as much as 30 percent, their employers said.

Members of the International Longshore and Warehouse Union — which represents about 26,000 workers at 29 West Coast ports, including Washington’s — “expanded disruptive job actions,” the Pacific Maritime Association said. The two sides said they continued talks Wednesday.

Union spokesman Craig Merrilees questioned the employer group’s statement that productivity fell in a range of 20 to 30 percent, saying the workers’ main action is coordinating breaks that normally are staggered. Both sides have said they want to avoid a work stoppage.

Nation and World

Mortgages

Fannie, Freddie stocks break slump

Fannie Mae and Freddie Mac rose the most in at least two decades, ending a five-day, 60 percent slump, after better-than-expected profit at Wells Fargo led most financial stocks higher.

Fannie Mae jumped $2.18, or 31 percent, to close at $9.25, the biggest percentage gain since at least 1980. Freddie Mac climbed $1.57, or 30 percent, to $6.83, the sharpest increase since at least 1988.

Fannie Mae fell 27 percent on Tuesday, while Freddie Mac dropped 26 percent on concern that U.S. Treasury Secretary Henry Paulson’s plan to rescue the companies won’t save stockholders.

“It’s a bit of a bounce” from the “thermonuclear” declines, said Juan Esteban Valencia, a credit strategist in London at Société Générale. “[Tuesday’s] reaction was extremely negative. … Investors may think the reaction was overdone.”

Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, have lost more than 80 percent of stock-market value this year on concern they don’t have enough capital to survive the biggest housing slump since the Great Depression.

Banking

Wells Fargo drop softer than expected

Wells Fargo gave anxious investors a pleasant surprise Wednesday, reporting a profit drop that was milder than anticipated and lifting its quarterly dividend by 10 percent.

Wells Fargo’s second-quarter profit fell 22 percent as more customers at the nation’s fifth-largest bank failed to pay back their loans. But it raised its dividend to 34 cents from 31 cents — at a time when many other financial institutions are slashing theirs to preserve capital.

The San Francisco-based company’s shares soared $6.72, or 32.8 percent, to close at $27.23 after tumbling alongside other financial stocks over the last several days on worries about more U.S. mortgage losses and bank failures.

Airlines

Fewer fliers, but no price relief in sight

There are signs overall demand for flying within the U.S. is softening, but industry observers insisted that will not stop rising fares, more fees and fewer domestic flights.

That point was underscored as Delta Air Lines reported a $1.04 billion loss in the April-June quarter, and American Airlines posted a $1.45 billion loss for the quarter. One-time charges and unprecedented fuel costs affected both airlines, which saw their shares soar as their results beat Wall Street expectations and oil prices dropped.

The two carriers have posted combined net losses of $9.2 billion since the start of the year.

Fares have risen across the country since January over 20 percent, and much higher in smaller cities, according to Rick Seaney of FareCompare.com. Oil prices have doubled in the last year.

Internet

EBay 2Q profit rises but outlook soft

EBay said Wednesday that its second-quarter profit jumped 22 percent, as the online-auction company enjoyed strong growth in its e-commerce sites and its PayPal payments service.

But eBay’s outlook for the current quarter was softer than analysts had been forecasting, and the auction company’s shares fell 6 percent in after-hours trading. The stock had gained 4.5 percent in regular trading to close at $28.10.

EBay earned $460 million, or 35 cents per share, compared with $376 million, or 27 cents per share, in the year-ago quarter. Excluding certain items, eBay earned 43 cents per share. That beat Wall Street’s forecast for 41 cents per share.

Retail

Starbucks turns attention to China

Coffee retailer Starbucks will expand in China after announcing plans to close 600 underperforming U.S. stores.

The Seattle-based chain’s changes will affect Starbucks’ China operations “more positively,” the company’s Greater China President Wang Jinlong said Wednesday in Hong Kong. “There will be more innovation, more new products, more resources, not only investment.”

China, where more people drink tea than coffee, “has the potential to become the largest market outside the U.S.” for Starbucks because the nation is the world’s largest with a population of 1.3 billion people, Wang said.

Starbucks has more than 300 stores in China and had announced plans to open at least 80 outlets this year.

Personal computers

Dell catching up to Hewlett-Packard

Dell posted a 21.9 percent increase in personal-computer shipments last quarter, outpacing market leader Hewlett-Packard for the second quarter in a row.

Hewlett-Packard’s second-quarter shipments rose 17.1 percent, helping the company keep the title of biggest PC maker for the eighth-straight quarter, market-research firm Gartner said Wednesday. Separately, researcher IDC also said Dell’s growth outpaced its larger competitor.

Dell, which lost the market lead to Hewlett-Packard in 2006, shifted away from only selling PCs directly to customers last year and began offering its machines through retail partners in the U.S. and overseas. Chief Executive Officer Michael Dell now sells PCs at more than 13,000 stores, compared with 80,000 for Hewlett-Packard.

“Dell’s expansion model has been working really well in terms of helping their shipment volumes,” said Gartner analyst Mika Kitagawa. “They’ve also been helped by their expansion into new international markets like China.”

Internet

New to YouTube: Lions Gate videos

Google, the owner of the most popular Web-search engine, will start putting videos from Lions Gate Entertainment on its YouTube video site, Chief Executive Officer Eric Schmidt said Wednesday.

Lions Gate will receive a portion of advertising revenue for the clips, Schmidt said at a conference in Los Angeles. Lionsgate has produced films including the “Saw” horror series.

Compiled from Bloomberg News, Seattle Times staff and The Associated Press