Share this article

print logo

BUSINESS BRIEFLY

DELTA GETS COMMITMENT FOR $600 MILLION IN FINANCING

ATLANTA (AP) -- A unit of American Express Co. agreed Monday to provide Delta Air Lines with up to $600 million in financing -- if the cash-strapped airline persuades its reluctant pilots to accept $1 billion in concessions. Delta shares soared 17 percent.

The deal with American Express Travel Related Services Co. calls for up to $100 million of the financing to be in loans. The remaining $500 million will be in the form of a prepayment of SkyMiles, which is Delta's frequent flier miles program. American Express credit card users can already earn SkyMiles with their purchases.

Delta, the nation's third-largest airline, has warned it will have to file for bankruptcy without the $1 billion in cuts from its pilots union. It has also said it may still have to file for bankruptcy even with the cuts because of its $20.6 billion in debt.

CONSUMER CONFIDENCE FALLS

NEW YORK (AP) -- Consumer confidence fell in October for the third consecutive month, The Conference Board said today.

The Consumer Confidence Index dropped 3.9 points to 92.8, down from a revised 96.7 in September. Analysts had expected a reading of 94.

"While consumers' assessment of the labor market this month showed a moderate improvement, the gain was not sufficient to ease concerns about job growth in the months ahead," said Lynn Franco of the private research group.

The Expectations Index, one component of the Index that measures consumers' outlook over the next six months, declined to 92.0 from 97.7. Meanwhile, The Present Situation index dipped to 94.2 from 95.3.

SEARS CREDIT DOWNGRADED

HOFFMAN ESTATES, ILL. (AP) -- Sears, Roebuck and Co.'s credit rating was cut by Fitch Ratings on Monday to BBB-, one notch above junk status, a few days after the retailer trimmed its 2004 earnings outlook.

Last Thursday, Sears reported a $61 million third-quarter loss and warned that 2004 earnings will be lower than expected following weak back-to-school and fall sales due to record fuel prices, economic uncertainty, warmer weather and hurricanes that affected sales in the Southeast.

Fitch said the retailer will be "challenged to reverse these negative operating trends given the tepid pace of the economic recovery, high oil prices and growing competition from the discounters and big-box specialty retailers."

OVITZ PAY WAS 'UNREASONABLE'

GEORGETOWN, DEL. (DOW JONES/AP) -- The compensation package granted to former Walt Disney Co. president Michael Ovitz was "unreasonable" and not in the interest of the entertainment giant's shareholders, a compensation expert testified Monday in a shareholder lawsuit.

Kevin J. Murphy, an economics and law professor at the University of Southern California, testified that Ovitz's annual base salary and bonus were well above what was paid to similarly situated media executives, as well as presidents who didn't hold the title of chief executive in Fortune 500 companies. The median combined salary and bonus for presidents who weren't CEOs was $540,000, Murphy said. Ovitz's annual salary and bonus was $8.5 million, he said.

YIELDS RISE ON TREASURY BILLS

WASHINGTON (AP) -- Interest rates on short-term Treasury securities rose in Monday's auction.

Three-month bills sold at a discount rate of 1.855 percent, up from 1.770 percent last week. Six-month bills went at 2.040 percent, up from 1.990 percent.

The new discount rates understate the actual return to investors -- 1.890 percent for three-month bills with a $10,000 bill selling for $9,953.11, and 2.090 percent for a six-month bill selling for $9,896.87.

Separately, the Federal Reserve said the average yield for one-year constant maturity Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 2.22 percent last week from 2.18 percent the previous week.