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September 15,
2005
Delta,
Northwest
File for Bankruptcy
Delta Air Lines and
Northwest
Airlines, two of the nation’s largest carriers, both filed for
bankruptcy yesterday,
CNN reported.
href='http://www.deltadocket.com/courtFiledDocuments/firstdayMotions-Orders.a…'>Delta,
the nation’s No. 3 airline, filed first. Northwest, the No.
4 carrier, followed
within minutes. Both cited the recent spike in jet fuel costs, which
have soared
nearly 20 percent since June 1, as prime reasons for seeking
protection from
creditors under chapter 11 of federal bankruptcy laws. "The
problem is
there is so much competition out there, that fares get driven into the
cellar,"
said industry consultant Michael Boyd. "All this does is get two
carriers
into position where they can better deal with it, but it’s not
going to solve
the basic problem that the industry [pricing] is irrational."
With the
twin filings Wednesday, nearly half of the domestic industry’s
capacity is now
on carriers operating in chapter 11, according to an estimate from
Bear Stearns.
href='http://money.cnn.com/2005/09/14/news/fortune500/bankruptcy_airlines/ind…'>Read
more.
id='2'>Delta
Hurts Disney, EDS
Walt Disney Co. CFO
Tom Staggs
also told investors at a Merrill Lynch conference in Pasadena, Calif.
that the
href='http://money.cnn.com/2005/09/14/news/fortune500/disney.reut/index.htm'>company
could have to write off $100 million in Delta Airlines aircraft
leases as
the carrier filed for bankruptcy, Reuters reported yesterday. Staggs
said that
a charge from the Delta investment "would obviously have a
meaningful impact
on our results for the quarter and the year." Disney’s
movie studio
division would post a loss of up to $300 million in the current
quarter, hurt
by weak box office ticket sales and higher marketing expenses from a
larger
slate of Miramax releases. Similarly, Electronic Data Systems Corp.,
the second
largest computer-services provider,
href='http://online.wsj.com/article/0,,SB112673642088741018,00.html?mod=rss_w…'>could
be forced to take a write-down on Delta Air Lines Inc. aircraft
equipment leases,
the Wall Street Journal reported yesterday. The Plano, Texas,
company,
which has struggled since 2002 with revenue declines and high costs,
held Delta
equipment leases valued on June 30 at $26 million, according to a
financial
filing. It also held $65 million in aircraft lease investments with
other airlines,
including Continental Airlines Inc. and American Airlines parent AMR
Corp.
id='3'>GE: Unscathed
by Airline Bankruptcies
As two of
America’s largest
airlines enter bankruptcy, investors and analysts said that General
Electric
Co., the world’s largest aircraft leasing firm, will escape
unscathed,
Reuters reported yesterday. GE has nearly $3 billion in outstanding
loans to
Northwest and Delta. Nicholas Heymann, analyst at Prudential Equity
Group, wrote
in a note to clients yesterday, stating that chapter 11 filings from
those carriers
would, in fact, be a positive factor for GE, since it secures those
debts with
assets equal to as much as three times the value of the loan. GE
Aviation Financial
Services, the transportation financing unit of GE Commercial Finance,
has about
$1.8 billion in outstanding loans to Delta and an additional $1
billion to Northwest.
Read
more.
id='4'>Credit
Card Break for Hurricane Katrina Victims
Credit card
companies now say
that they will waive penalties for Katrina victims who are unable to
pay on
time, the Associated Press reported yesterday. Credit card giant MBNA
Corp.
will give hurricane victims a two-month payment holiday and a break
from cash
advance and late fees. Jim Donahue, an MBNA spokesman, acknowledged
that some
people will take on more debt than they can repay, and that it was too
early
to tell what the credit card company would do then. Rhonda Bentz, a
spokeswoman
for Visa USA Inc., said that most banks that issue Visa cards are
expected to
offer more lenient terms to hurricane victims.
href='http://www.cnn.com/2005/US/09/14/katrina.credit.ap/index.html'>Read
the full story.
id='5'>Georgia
Chief Justice Attempts to Aid Lawyers
Georgia’s top
judge is
trying to make things easier for hurricane-displaced lawyers who want
to start
a practice in Georgia, the Fulton County Daily Report said
today. Chief
Justice Leah Ward Sears of the Georgia Supreme Court has asked her
counterparts
in Louisiana, Mississippi and Alabama to change their rules so that
lawyers
from those states could get a State Bar of Georgia license in as
little as eight
weeks. Now, those lawyers can practice in Georgia temporarily but must
pass
the state’s bar exam to do so permanently. Louisiana,
Mississippi and
Alabama do not allow reciprocity with other states. For states that
do, lawyers
licensed in one state can join another state’s bar without
having to take
its bar exam. If the top judges in those states agree, then lawyers
from the
Gulf Coast states would need only to pass a certification of fitness
to practice
in Georgia.
href='http://www.law.com/jsp/article.jsp?id=1126688715073&rss=newswire'>Read
more.
id='6'>Mirant
Wants to Reopen Plant
Mirant Corp. plans to
propose
that its Alexandria, Va., power plant be allowed to reopen on a
limited basis
while the company seeks solutions to the environmental problems that
resulted
in the plant’s shutdown last month, the Washington Post
reported today.
The plan must pass muster with the Virginia Department of
Environmental Quality,
which ordered Mirant to take immediate steps to reduce pollution.
Mirant decided
on Aug. 24 to shut down the plant in response to the order from
Virginia officials
to cut potentially harmful pollution from the coal-fired facility.
Atlanta-based
Mirant, which filed for bankruptcy in 2003, operates four plants in
the Washington,
D.C., area.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/09/14/AR20050…'>Read
the full story.