No. 1: US Airways' bankruptcy

Whether a slimmed-down US Airways will emerge from its second round of bankruptcy, sell off its assets or possibly merge with a competitor was the ongoing saga that dominated regional business news in 2004 as the struggling carrier's fate continued to cloud Pittsburgh's economic future.

Unable to quickly wrest $1 billion in cost concessions from its labor unions and coping with skyrocketing fuel prices, rapidly expanding low-cost carriers and a business model that collapsed in the post-9/11 paradigm, the airline filed for Chapter 11 bankruptcy protection for the second time in two years on Sept. 12.

The move came six months after the region's dominant carrier replaced David Siegel as chief executive with Bruce Lakefield, and five months after the airline delivered a devastating blow to the region, saying it would strip Pittsburgh of its hub status, a third of its daily flights and all of its nonstop flights to Europe, starting in the fall.

By year's end, the news looked even worse, with thousands of local jobs in the balance as the airline debated whether to close maintenance facilities here or in Charlotte, N.C., as well as a reservations center here or in North Carolina. The betting was the local facilities on both fronts would be the most likely candidates to close.

US Airways already employs fewer than 7,000 in the region, down from nearly 13,000 before 9/11 wracked it and the rest of the airline industry. The carrier did its first stint in Chapter 11 from August 2002 to March 2003, and since then has been pleading with its unions to help reduce its costs.

There appeared to be progress on the concessions front by year's end. The pilots have approved more than $300 million in concessions, and gate, ticket and reservation agents on Thursday ratified a $137 million deal that would reduce their wages by an average of 12.9 percent. Leaders of the flight attendants union also agreed recently to a $94 million concessionary package that would pare pay by an average of 9 percent and trim other benefits. Votes of the rank-and-file will be counted Jan. 5.

Of the major unions, that leaves only the baggage handlers and mechanics without an agreement. The airline is looking for $100 million in cuts from the former and $254 million from the latter. Both groups are represented by the International Association of Machinists and Aerospace Workers, which is under pressure from the national office not to budge.

Without the additional employee wage and benefit cuts, which would follow a billion in givebacks in the last bout of bankruptcy, management has said the airline could go out of business by January.

If it can't secure the concessions it wants, the airline has asked the bankruptcy court in Alexandria, Va., to throw out the contracts of the holdout unions. That issue was argued in court for several days earlier this month and a judge is expected to render an opinion Jan. 6.

If the court allows US Airways to abrogate the union contracts, the flight attendants have authorized their members to strike.

Many US Airways employees are already working at wage levels well below their contracts. In November, the bankruptcy court imposed emergency pay cuts of 21 percent through February for union employees except the pilots and some smaller groups of workers.

The airline also is trying to get the bankruptcy court to allow it to terminate pension obligations for 53,000 current and former employees.

By year's end, much of Pittsburgh was waiting to see whether the unions would agree to givebacks to help salvage the airline, and whether Pittsburgh International Airport would be able to woo many new carriers if US Airways is unable to survive.

No. 2: Merger roadblocks

While US Airways' plight made daily headlines, other companies generated some unresolved stories of their own this year:

Canonsburg-based generic drug maker Mylan Laboratories in July announced plans to acquire King Pharmaceuticals, a Tennessee drug producer, in a $4 billion deal designed largely to provide Mylan with access to King's brand-name drug sales force.

But in August, longtime corporate raider Carl Icahn began buying up Mylan shares and moved to block the acquisition, saying he believed Mylan would pay too much for King.

By year's end, Icahn had offered to buy Mylan for $20 a share -- significantly above its recent trading price -- and had taken his fight to federal court in a suit in which he claims Mylan CEO Robert Coury and others tried to manipulate shareholders to vote for the merger. Icahn also pledged to try to oust Mylan's board.

The Mylan-King deal was somewhat in question because King disclosed it would restate earnings results to correct accounting practices. Though Mylan has the right to walk away from the merger because of the accounting issues, analysts doubt that would happen.

Another big acquisition announced in July that could eventually be scrapped is PNC Financial Services Group's proposed deal to buy Riggs Bank, the scandal-ridden Washington, D.C., institution, for $779 million.

The deal looks questionable because of problems at Riggs, including a Justice Department investigation of possible money laundering. PNC CEO James Rohr said his bank was prepared to pull out if Riggs does not resolve its problems and the deal becomes too risky. Rohr also said PNC expects to reduce employment next year mainly through attrition.

No. 3: Children's, UPMC feud

The cost of a new Children's Hospital in Lawrenceville became the source of a very public battle between Children's and the University of Pittsburgh Medical Center, which had promised to build the new complex as part of a 2002 merger with Children's.

Children's CEO Ron Violi put the cost at $473 million, about $28 million above what UPMC contended the project was budgeted to cost. Both parties eventually settled on the $473 million figure, with the Children's Hospital foundation agreeing to raise funds for the cost difference.

But there was fallout from the spat: Completion date for the new hospital was moved back from late 2006 to mid-2008, and Violi said he would step down Jan. 1 from the CEO position to run the Children's foundation.

UPMC generated controversy again in December when Paul O'Neill, the former Alcoa chairman and U.S. Treasury Secretary, said he quit UPMC's board because UPMC would not embrace a plan he proposed to reduce medication errors, and questioned the future of the Pittsburgh Regional Healthcare Initiative.

The initiative, a coalition of businesses, academics and doctors to reduce medication errors, was a pet project of O'Neill, who acknowledged he had clashed with UPMC management over other issues as well. His departure set off a round of criticism of UPMC for its failure to disclose board changes and other information.

In other medical industry news, health-care costs continued to soar while business and labor leaders called for reforms. The cost of corporate health-care plans nationwide rose by 11.2 percent this year, the fourth consecutive double-digit increase since 2004, according to the Kaiser Family Foundation Health Research and Educational Trust.

Costs for Pittsburgh businesses were even higher. Highmark Inc., for instance, said its customers were hit with premium increases as high as about 15 percent. Unable to meet such costs, some businesses dropped employee coverage. In Highmark's case, shrinking enrollment in its health-care plans resulted in layoffs for a couple hundred workers.

At least one health-care organization had reason for optimism. West Penn Allegheny Health System posted its first annual profit since a merger four years ago between West Penn Health Systems and the bankrupt parent of Allegheny General Hospital and its suburban affiliates.

No. 4: Glass woes, steel grows

The region's glass industry was dealt two major blows with the shutdown of Glenshaw Glass Co. and Anchor Glass Container Corp.'s facility in South Connellsville.

Owners of the 109-year-old Glenshaw plant, which employed about 300, had made known its financial woes and had suffered severe equipment damage in the September flooding caused by Hurricane Ivan. The company was put into receivership Nov. 5, union members subsequently rejected a concession package, and production stopped Nov. 22. Several buyers are thought to be looking at the plant, which needs millions in new investment.

The 340 workers at Anchor Glass didn't have any warning when Florida-based Anchor abruptly closed their plant in early November. The closing was especially exasperating for depressed Fayette County, where the unemployment rate is close to 10 percent -- consistently the highest jobless rate in the region.

Another surprise plant shutdown occurred early this year when Bake-Line Corp. closed its cracker factory, the former Nabisco and Atlantic Baking plant in East Liberty, putting about 300 people out of work. The parent company filed for Chapter 7 bankruptcy liquidation, leaving workers without severance or health-care benefits.

Real estate developer The Ferchill Group, which is converting former H.J. Heinz Co. buildings on the North Side into luxury lofts, is eyeing the old Nabisco plant for possible residential apartments.

The severe September floods also took a toll on businesses throughout the region, leading furniture retailer Wickes and plastics producer Stylette to close their damaged facilities and pull out of the market.

One bright spot in the manufacturing sector was steel, as prices and profits rose and shares in steel stocks hit new highs. Local producer U.S. Steel, for instance, reported record third-quarter profits and a $1 billion cash reserve, while its shares began climbing to levels not seen in over a decade after business journal Barron's last month predicted the stock could hit $60 a share within a year.

No. 5: FreeMarkets becomes Ariba

The biggest stories in the region's tech sector this year involved acquisition, merger and change.

FreeMarkets, the locally grown online auction business once considered a star of the region's new high-tech ventures, was acquired in July for $493 million by a Silicon Valley competitor, Ariba. Both companies had lost money since the dot-com market decline but were considered a good fit to merge.

Employment at the former FreeMarkets center Downtown hasn't declined dramatically yet -- only about 60 were laid off from a total of 650. Among those to go: chairman and co-founder Glen Meakem, who is staying in town and recently invested $500,000 in a start-up that publishes college guides.

In a merger of two technology development organizations, the Pittsburgh Digital Greenhouse and the Robotics Foundry said they would combine efforts Jan. 1. With its pooled resources, the group aims to attract government funding and add new start-ups in robotics and information technology.

Another development group, Innovation Works, was the target of critics who said it had failed in its mission to fund fledgling tech ventures. Florri Mendelson, the organization's CEO, resigned after the agency said it would re-evaluate its mission.

No. 6: Downtown down, South Side up

Lazarus and Lord & Taylor, two major department stores heralded just a few years ago as major components in the Murphy administration's plans to redevelop Downtown's retail district, shut their doors.

The closings were announced months in advance and were attributed to struggles not just in Pittsburgh but at many of the chains' other locations. The sting nonetheless hurt a central Downtown corridor already struggling to try and pick itself up.

While local real estate firm J.J. Gumberg Co. plans to put new retail in the Lord & Taylor building on Smithfield Street, a deal to sell Lazarus' building at Fifth Avenue and Wood Street to a New York developer was scrapped.

Other casualties in the demise of the Fifth-Forbes corridor were the last two Card Center stores operated for nearly 50 years by the Maloney family.

The proprietors said they couldn't afford to wait for Downtown to get its long-promised rejuvenation.

Retail isn't the only thing deteriorating Downtown. Commercial real estate values also declined as reflected in this year's sale of Gateway Center.

The complex -- including four office towers and two parking garages -- was scooped up by Hertz Investment Group for $55 million, about $2 million less than Trizec Properties paid for it in 1995.

But across the rivers from the Golden Triangle, there's a drastically different retail and office scene: Along the Monongahela River on 34 acres once occupied by an LTV Steel plant, South Side Works, the Soffer Group's $450-million, mixed-use development that opened officially in September, is drawing steady crowds with retail, restaurants including big-name chain Cheesecake Factory, and a 10-screen cinema.

Over on the North Shore, the promised development surrounding PNC Park and Heinz Field also is in full swing, including construction of new headquarters for Del Monte Foods and Equitable Resources and a 198-room Marriott SpringHill Suites hotel. The only snag so far is financing for a $30-million parking garage which the Steelers and Pirates want in place soon, especially with the 2006 All-Star Game scheduled to be played at PNC Park.

No. 7: More energy, chemicals

Monroeville-based Westinghouse Electric Co. got a big boost for its plan to bid for nuclear plants in China when it received final design approval in September from the Nuclear Regulatory Commission. During a visit to China earlier in the year, Vice President Dick Cheney put in a good word for Westinghouse, which is waiting for federal design certification for possible new nuclear plants on the domestic front as well.

Also on the energy front, Duquesne Light Co. CEO Morgan O'Brien disclosed a plan to invest $570 over three years to upgrade and expand its aging transmission and distribution network -- clearing it to generate profits once federal tax incentives passed in the late '80s to spur alternative energy development expire in 2007. It also will seek to raise rates, though a longer-term plan for rate increases was shot down by the state Public Utility Commission earlier this year.

In what should be a gain for the region's efforts to grow the local chemicals industry, Bayer Corp. said it would locate the U.S. headquarters for its new chemical spinoff at the RIDC West office park in Findlay. The new venture, Lanxess, eventually will be a publicly traded company and operated separately from German-based Bayer, which has its U.S. headquarters in Robinson. Lanxess expects to employ up to 435 over three years. It didn't hurt that the state provided $3.56 million in assistance to keep the business here.

No. 8: Native name on school

Carnegie Mellon University's business school became the Tepper School of Business in March, when Wall Street investor and Peabody High School graduate David Tepper came home to donate $55 million to CMU -- the largest donation in the school's history.

Tepper, who grew up in Stanton Heights, earned his bachelor's degree at the University of Pittsburgh, and his master's from CMU, said he was donating the money to repay the school and the city for his education.

The school will use $5 million of the gift to attract and retain faculty and market its highly ranked program, while $50 million will go into the school's endowment.