What will happen to Charlotte in a potential merger between US Airways and American Airlines? Who will succeed Jim Rogers as chief executive at Duke Energy? Will Charlottes residential real estate recovery continue and will commercial development follow suit?
Those are among the business storylines to watch in Charlotte and statewide in 2013.
Airway merger to impact Charlotte hub?
The biggest story in the aviation industry for the past year has been US Airways attempt to pull off a merger with larger rival American Airlines, and its a merger many industry-watchers think is likely to culminate this coming year.
Tempe, Ariz.-based US Airways accounts for almost 90 percent of all daily flights from Charlotte Douglas International Airport, which is the airlines busiest hub. Some 7,100 US Airways employees are based in Charlotte. The hub is frequently cited by business leaders as one of the citys most valuable assets, providing direct flights to dozens of destinations it wouldnt otherwise have.
If the merger happens, expect plenty of questions about how flights will be changed. US Airways, the No. 5 carrier, and American Airlines, the No. 3, would have to knit their networks together as they formed the nations largest airline, by domestic market share.
Officials in Phoenix and Philadelphia, two of US Airways current hubs, have already said theyre concerned about losing flights. And though US Airways CEO Doug Parker and Charlotte aviation director Jerry Orr have both said they believe a merger will lead to more flights, not fewer, out of Charlotte Douglas, a mergers effects can be notoriously unpredictable.
Regardless of any uncertainty, Charlotte Douglas is plunging full speed ahead for expansion. The airport has about $1 billion worth of projects planned or underway, to be funded with bonds backed by the airports revenue.
One final kink in the airports future is Orrs possible retirement. Hes been in charge of the airport for more than two decades, and shepherded Charlotte Douglas through much of its growth. If he retires this year, whoever succeeds him will be in a position to have a large impact on the future of the airport, and the whole city. Ely Portillo
Duke looks for Rogers successor
With two state investigations resolved, Duke Energy looks to find a successor to CEO Jim Rogers in 2013 and make good on claims its $32 billion merger with Progress Energy will be good for customers and investors.
Rogers, CEO since 2006, will retire at the end of next year a schedule suggested by the expiration of his contract but mandated by the settlement that ended merger investigations by the N.C. Utilities Commission and Attorney General Roy Cooper. The settlement also directs a search committee to try to find a new chief executive by July. meaning Rogers could make an early exit.
Duke has traditionally elevated its CEO from within, and chief financial officer Lynn Good and chief nuclear officer Dhiaa Jamil could be among the candidates. Some analysts, however, expect Duke to look elsewhere for a new leader of the nations biggest utility.
New managers, resolution of the merger probes and the impending retirement of some legacy Duke directors should ease regulatory skepticism in North Carolina, a welcome development for Duke. Its Progress Energy Carolinas subsidiary expects a decision on its 11 percent rate increase request in 2013, and Duke Energy Carolinas plans to file another rate case its third since 2009 in February.
Duke expects a ruling in early 2013 by the Indiana Utility Regulatory Commission resolving cost overruns, and claims of mismanagement, in construction of its Edwardsport coal-fired power plant, now more than $1 billion over budget. The company also expects to decide whether to retire or repair, at a cost of up to $3.4 billion, the crippled Crystal River nuclear plant it inherited with the Progress merger. Bruce Henderson
Taxes and regulatory changes for business
North Carolina Republicans have laid out a wide-ranging business agenda that they believe will be carried out more quickly now that one of their own former Charlotte mayor Pat McCrory will be in the governors mansion.
State lawmakers will continue to review and roll back regulations on businesses. Theyll also take on tax code reform, with the broad goal of reducing overall tax rates by closing loopholes and possibly extending the sales tax to services.
The General Assembly will also have to figure out what to do with unemployment insurance, which currently faces a $2.5 billion debt to the federal government. A recently introduced bill would cut benefits to unemployed workers and require more employers to contribute.
At the federal level, the regulatory picture for the health care and financial sectors will continue to change.
As President Barack Obamas signature health care law continues to go into effect, a new tax will be levied on manufacturers and importers of medical devices. And federal regulators will continue to churn out new rules for banks as part of the Dodd-Frank financial reform law. Look for banks to continue their stepped-up lobbying as they seek to shape the ban on proprietary trading known as the Volcker Rule and the evolving role of the Consumer Financial Protection Bureau. Andrew Dunn
Banks look to continue recovery
All of Charlottes banks will continue to battle low interest rates and a modestly growing economy.
Bank of America will continue to dig out from the hundreds of thousands of delinquent loans still on its books. It also faces billions of dollars of liability in lawsuits brought by investors who bought mortgage-backed securities from the bank that then went sour
The bank also expects to finish the first phase of its cost-cutting measure known as Project New BAC, which involves 30,000 job cuts. By the end of the year, Bank of America hopes to shave $5 billion off its annual expenses.
Wells Fargo, which has used mortgage refinancing to boost profits over the last few quarters, will keep close watch on originations to see when to scale back the business and figure out what the next profit driver will be.
Both Bank of America and Wells will have to show the monitor of the $25 billion mortgage servicing settlement that theyre complying with hundreds of new rules. In the first quarter, settlement monitor Joseph Smith will issue his first report detailing how the banks are doing.
On the plus side, balance sheets at community banks will also continue to clear as banks work through bad loans. After a number of purchases in 2012, community banks will likely continue to consolidate. Andrew Dunn
Housing on the upswing
Housing turned from a drag on the economy into one of its brighter spots in 2012.
Home sales, home prices and new construction are expected to continue growing next year, even if overall economic growth decelerates, economists predict.
Jobs are being created and people continue to move into the Carolinas, driving demand. Investors are also buying up distressed properties, a trend expected to continue.
The supply of available housing has been shrinking in recent months, leading some to believe the housing industry will continue to evolve into a stronger buyers market in 2013.
In addition to housing inventory remaining relatively low, some experts say they dont see interest rates rising during at least the first half of next year, boding well for housings continued recovery. Mortgages remain hard for some borrowers to get, but economists say credit could become easier to get. Kerry Singe
Apartments dominate new development
The weak economy has kept commercial real estate construction in the slow lane. But as the residential housing market continues to improve, commercial development should pick up too, experts say.
Most commercial development that occurred in 2012 involved apartment complexes. Multifamily projects are expected to dominate development next year.
About 4,000 apartment units were under construction for the Charlotte area as of mid-December with another 11,000 proposed, according to Real Data.
Many of the units are part of large, amenity-laden communities being built near the light-rail line. But some are part of boutique infill projects cropping up in neighborhoods near uptown.
The new homes are expected to boost demand for new retail projects.
Charlottes uptown, meanwhile, is set to post a record year for office building sales. By the end of 2012, Charlottes uptown office market could boast a sales volume of more than $553 million, beating the previous high from 2007, when roughly $500 million in uptown properties traded hands.
Among the properties that sold: NASCAR Plaza, 525 N. Tryon Street and Hearst Tower.
Office brokers, meanwhile, say they are starting to see greater demand from prospective tenants looking to lease space, a trend they expect to see continue in 2013.
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