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Horizon Lines, Inc. said Wednesday that it placed six employees on administrative leave amid a federal investigation into allegations of price fixing on shipping routes to Puerto Rico.

Two of the employees resigned, the Charlotte, N.C.-based shipping company said in a statement. Horizon is Hawaii’s second largest ocean-shipping company.

On April 17, federal authorities entered the offices of Horizon and other shippers with search warrants and grand jury subpoenas relating to an investigation of pricing practices on Puerto Rico routes. Horizon Chief Executive Chuck Raymond has emphasized that neither the company nor any employees have been charged in the investigation.

"The company continues to fully cooperate with the Department of Justice in its investigation," Horizon Lines (NYSE: HRZ) said in the statement on Wednesday.

Four federal lawsuits seeking class-action status have been filed by customers who paid for shipping on Horizon, Sea Star Line, Crowley Maritime Corp. and Trailer Bridge Inc. The lawsuits, three in Florida and one in Puerto Rico, allege the shipping lines conspired for the last four years to fix prices on trade routes to Puerto Rico.

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As if high fuel prices aren’t enough, airlines and passengers are getting pinched by rising taxes as the U.S. government demands a bigger piece of the pie.

About 20% of the price of a $300 domestic round-trip ticket goes to taxes and fees, according to the Air Transport Association, compared with 13% in 1992 and 7% in 1972.

"When the government decides to throw another tax on passengers, that is greatly hurting an already financially hurting industry," said ATA spokesman David Castelveter. "We’ve long said that we are one of the most overtaxed industries, and we now are dealing with record-level fuel increases. The airline industry is in a worse financial situation than it was on 9/11."

Rick Seaney, chief executive of online ticket vendor Farecompare.com, estimated that the U.S. government reaped $40 billion in airline ticket taxes in 2007.

Seaney broke down the price of a $300 domestic round-trip flight:

• $146.15: Roundtrip airfare
• $93.02: Fuel surcharge
• $18.00: Passenger facility charge toward airport improvements
• $14.00: Federal flight segment tax to Federal Aviation Administration projects
• $10.00: Sept. 11 security fee to the Transportation Security Administration
• $11.85: Federal sales tax (7.5%) on airfare
• $ 6.98: Federal sales tax (7.5%) on fuel surcharge.

Seaney said airlines also pay a 4.4% federal excise tax on jet fuel, and an additional sales tax on fuel that varies depending on the city and state of purchase. Those costs are factored into the price of airfare.

"Where is the money going, and why isn’t air travel any easier after collecting billions and billions of dollars?" he asked, noting that passengers are still dealing with cancellations and delays.

Chris White, a spokesman for the TSA, said that Sept. 11 fees are used to fund security for airports and airlines. Brian Turmail, a spokesman for the Department of Transportation, said the federal flight segment tax is used to fund the air traffic control system, while the passenger facility charge is used for airport maintenance.

On top of taxes, the industry is dealing with soaring fuel prices. Fuel cost is now 36.5% of the price of a ticket, compared to 15% in 2000, according to the ATA, which estimates that jet fuel costs will rise to a record-breaking $59.5 billion in 2008, compared with $41.2 billion in 2007.

Seaney of Farecompare.com said if fuel prices continue to rise, and the government continues to add fees, "the combination of the two could be lethal."

"The last thing the government needs to do is pile on [more fees]," he said, suggesting that legislators suspend some or all of the fees until fuel costs drop dramatically.

This would not be unprecedented, said Seaney, since the government lifted the Sept. 11 security fee during the summer of 2003 as part of the Emergency Wartime Supplemental Appropriations Act.

The funding is set by the FAA reauthorization bill, which passes through Congress every five years and makes it possible for the DOT to operate the FAA, according to Turmail. The Senate failed to pass the FAA reauthorization bill on May 6, and its fate is still to be decided in Congress.

Turmail said the current bill proposes a shift in the federal flight segment tax from passengers to the airlines, as well as to corporate and private jets, to "put less of a burden on air travelers." The airlines could pass that tax onto passengers through higher airfares, he said, but that depends on whether they can successfully raise ticket prices.

The most recent widespread fare increase occurred May 8, when Delta Air Lines (DAL, Fortune 500), United Airlines (UAL) and American Airlines (AMR, Fortune 500) added $20 to the price of a round-trip ticket. ATA president James May said in a Tuesday press conference, that another fare increase during the summer is "inevitable," and rising fuel prices are to blame.

May said fewer people will travel this summer, partly because of the poor economy. But for this reason, some analysts believe airline prices have already neared their peak.

"They will try to raise fares, but the question will be whether they can succeed in doing so in a weak economy," said Phillip Baggaley, a fixed income analyst for Standard & Poor’s. 

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Visitor arrivals to Hawaii will decline by 3 percent this year, twice as much as previously projected, in part because of the shutdown of Aloha Airlines and ATA, according to the quarterly economic report released by the state on Monday.

The quarterly economic report from the Hawaii Department of Business, Economic Development & Tourism expects moderate to slower growth for Hawaii this year, and in 2009.

"We believe that our economy will adjust to recent economic events and that our fundamental economic foundation remains strong," director Theodore E. Liu said in a statement.

DBEDT had previously forecast visitor arrivals to decline by 1.4 percent, but now expects that figure to be 3 percent. The agency forecasts no growth in 2009, followed by 1.4 percent growth in 2010 and 1.7 percent growth in 2011. The shutdown of the two airlines, coupled with the departure of two cruise ships, were cited by the department as the primary causes for the decline in visitor numbers.

Visitor days, which are the number of arrivals times the length of stay, are forecast to drop 2.4 percent this year, after a 1.5 percent decline in 2007, and are expected to remain flat in 2009 before starting to recover in 2010 and 2011.

Visitor expenditures are projected to remain flat this year, with less then 1 percent growth, before rebounding in 2009 with 3.6 percent growth, followed by 4.4 percent growth in 2010 and 4.7 percent growth in 2011.

The report forecasts moderate growth over the next couple of years for personal income, total wage and salary jobs, and state gross domestic product, although the projected rates of growth have decreased from the previous forecast.

The report cut the forecast for real personal income growth in half, to 0.8 percent, down from 1.6 percent. Income is forecast to grow 1.1 percent in 2009, which is also a 0.8 percent downward revision from the previous forecast.

The forecast for job growth this year was lowered by 1 percentage point, downward to 0.4 percent, from 1.4 percent, while the forecast for 2009 was revised downward to 0.8 percent from 1.3 percent in the previous forecast.

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Trial lawyers in the state and a group proposing to severely restrict the ability of plaintiffs to bring contingency fee civil lawsuits have agreed to withdraw competing ballot issues aimed for the November ballot.

John Sadwith, executive director of the Colorado Trial Lawyer's Association (CTLA) said the decision was made late Tuesday after continuing talks with the group promoting the restrictions on how much lawyers could collect in successful civil actions.

"We didn't think it was the best interests of working people in the state" to go forward with gathering signatures and putting the measures on the November ballot, Sadwith said.

Mark Hillman, a former state lawmaker and acting treasurer for the state, represented a group from Colorado Springs that brought the original ballot measure restricting contingency fees.

The measure triggered a response from the trial bar that included nine separate counter measures. One would have capped compensation by CEOs, another would revoke licenses of doctors involved in multiple malpractice cases and still another altered what real estate agents could collect in commissions from sales. Others targeted homebuilders accused of construction defects and another tried to guarantee in law the right of a jury trial in civil lawsuits.

In all, nine measures from the trial lawyers targeted various sectors of the economy with new legal requirements. One measure would have subjected federal farm subsidy payments to state income taxes.

Hillman is a wheat farmer from Burlington.

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Harley-Davidson Inc.'s chief executive officer James Ziemer told attendees of the company's annual shareholders meeting Saturday morning that he "agonized" about the recent decision to cut the company¹s work force by about 730 employees.

"Excruciating is the word," Ziemer told a gathering of several hundred shareholders who attended the meeting at the Pfister Hotel in downtown Milwaukee. "Make no mistake, I agonized over this decision. In fact, it was one of the most difficult decisions I've ever had to make."

The Milwaukee-based motorcycle manufacturer announced April 17 that it planned cut motorcycle production and slash 370 hourly production workers and 360 non-production employees over the next several months as a result because the sluggish U.S. economy has slowed demand for the company's products.

"The erosion of consumer confidence in this country has lasted longer and runs deeper than most economists predicted," Ziemer told shareholders. "Very few businesses have escaped the impact and the entire motorcycle industry has been affected."

Ziemer said it's "undisputable" that the economic slowdown in the United States has affected retail sales for Harley-Davidson's dealers.

Harley plans to ship 23,000 to 27,000 fewer motorcycles in 2008 than in 2007, resulting in total planned 2008 shipments of between 303,500 and 307,500 units.

"Our decision to reduce our motorcycle shipments and our work force was driven by what our dealers have been experiencing at retail along with the continuing turmoil in the economy," Ziemer said. "I believe the actions we are taking are the right actions. We have an obligation to our dealers as well as all of our other stakeholders to manage Harley-Davidson for the long term and that's what we are doing in this situation."

First-quarter net income for Harley-Davidson (NYSE: HOG) slid 2.5 percent to $187.6 million compared with $192.3 million for the same period a year ago.

Earnings per share in the quarter were 79 cents, a 6.8 percent increase compared with 74 cents for the year-ago period. Per-share results rose because of stock repurchases.

Revenue for the quarter was $1.31 billion, compared to $1.18 billion in the year-ago quarter, a 10.8 percent increase.

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Cerner Corp. posted strong fourth-quarter and full-year earnings on revenue growth that shot the company beyond the $1.5 billion mark for the first time.

After the market closed on Thursday, the North Kansas City-based health care information technology company (Nasdaq: CERN) reported revenue of $394.5 million for the quarter that ended Dec. 29, up 3.6 percent from $380.8 million a year earlier.

Earnings in the quarter were $41.3 million, or 49 cents a share, up 5.6 percent from $39.1 million, or 50 cents a share, a year earlier.

Adusted diluted earnings were 52 cents a share in the quarter.

Seventeen analysts surveyed by Thomson First Call reported a consensus estimate for adusted diluted earnings of 51 cents a share for the quarter and $1.74 for the year.

Thirteen analysts reported a consensus revenue estimate of $412 million for the quarter, and 15 analysts reported a revenue estimate of $1.54 billion for the year.

For the full year, Cerner reported $1.52 billion in revenue, up 10.3 percent from $1.38 billion in fiscal year 2006.

Earnings for the year were $127.1 million, or $1.53 a share, up 15.6 percent from $109.9 million, or $1.34 a share, in fiscal 2007.

In the fourth quarter, Cerner completed installation of its Millennium software programs at 339 client facilities. It now has turned on more than 7,500 Cerner Millennium programs at more than 1,200 facilities worldwide.

In a release, Cerner CEO Neal Patterson also credited the company's focus on margin expansion and cash-flow generation for the strong earnings growth and cash flow Cerner delivered in the fourth quarter.

"With a solid 2007 behind us, we have a good outlook going into 2008," Patterson said in the release. "Solid execution of our 2008 financial and operational plans should result in strong revenue and earnings growth and accelerating free cash flow.

"We will also continue to innovate and execute on our strategic initiatives, which will allow us to redefine our boundaries as we approach the next decade.

For 2008, Cerner expects revenue growth of 10 to 12 percent from 2007, the release said.

Cerner ranks No. 12 on the Kansas City Business Journal's list of area public companies.

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