Business in brief: Cost of rubber inflates tire prices

Tire inflation used to mean something else. Now, thanks to soaring prices for oil and rubber, it refers to tire prices as well as air pressure.

Consumers shopping for a new set are finding the tab up 5 percent to 10 percent this year and likely to head higher.

Keith Price, a spokesman for Goodyear Tire & Rubber, says the price of oil, now at all-time highs, makes up 60 percent of the raw materials cost for a tire. Natural rubber, a commodity nearing 28-year price highs, makes up another 25 percent.

DENVER

Frontier Airlines plans to cut planes, jobs

Frontier Airlines says it plans to trim capacity, planes and eventually jobs this fall and winter in the wake of its April filing for bankruptcy protection.

The Denver-based carrier, which serves Spokane, announced the cutbacks Wednesday but did not say how many jobs might be lost.

It says its mainline capacity will be down 17 percent from September through March compared with the same period a year earlier.

Frontier Chief Executive Sean Menke says the moves are difficult but necessary as the airline industry deals with record fuel prices and a slowing economy.

MINNEAPOLIS

General Mills raises prices of cereal

With ingredient prices popping up like toaster strudels, General Mills said on Wednesday it has raised cereal prices and might consider other price increases, too.

The maker of Yoplait Yogurt, Wheaties cereal and Pillsbury Toaster Strudel said its fourth-quarter profit dropped 17 percent. But the profit still met Wall Street expectations and its revenue beat expectations.

Much of the profit drop was due to a hedge against higher ingredient prices during the quarter.

The company said it expects supply chain expenses to rise another 9 percent in the fiscal year that will run through May 2009.

NEW YORK

American Express, MasterCard settle suit

American Express Co. has ended another round of litigation with a rival card company, but still faces serious headwinds from its customers.

After announcing it will get $1.8 billion from MasterCard Inc. in settlement of an antitrust suit, the credit card lender — known for catering to jet-setters and the well-heeled — revealed that it underestimated how quickly cardholders are falling behind on debt.

“Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations,” AmEx Chief Executive Kenneth Chenault said in a statement.

From wire reports