NATIONAL BRIEFING

Thursday, July 31, 2008

AIRLINES

Baggage Problem Delays Flights

American Airlines said about 25 departures were delayed as much as 90 minutes by a baggage-system problem at New York's John F. Kennedy International Airport.

A malfunction in software that controls a baggage-sorting conveyor belt is forcing the airline to sort bags manually. The problem affected more than a third of American's departures yesterday from the airport, a spokesman for the airline said.

Merger Sparks Pension Worries

Officials of unions representing Northwest Airlines flight attendants, ramp workers and reservation agents told Congress that they are worried Delta Air Lines's plan to combine the two carriers could lead to lost pension benefits for employees. The officials said at a House hearing that they have not received assurances that benefits would be protected if Delta's buyout of Northwest is completed.

"If this merger continues and is consummated, they will surely lose benefits going forward," said Robert Roach Jr., general vice president of the International Association of Machinists.

Rob Kight, Delta vice president for compensation, benefits, and services, said at the hearing that Delta intends to maintain pension plans of both carriers that were frozen while in bankruptcy.

ENERGY

Offshore Leasing Under Review

The Interior Department said that it would revise its five-year plan for offshore oil leases, but the process would take two years and no change would take effect before 2010. The current five-year Minerals Management Service plan for offshore leases expires in 2012, but Interior Secretary Dirk Kempthorne said that an early review was needed because of higher oil prices and President Bush's lifting of an executive ban on drilling off Pacific, Atlantic and west Gulf of Mexico coasts.

LEGISLATION

GOP Blocks Tax Credits

Senate Republicans blocked consideration of a measure that would revive or extend tax credits for renewable energy and research and development, as well as an array of other business tax breaks. It also would revive tax credits that let individuals deduct state and local sales taxes, and it would prevent the alternative minimum tax from expanding to ensnare more than 25 million taxpayers.

It was the fourth time in two months that the GOP has refused to let the measure move forward, reasoning that it would permanently raise taxes on some financial players -- including hedge-fund managers and multinational corporations -- to pay for a temporary extension of tax breaks for others.

Murtha Steps Into Tanker Debate

Rep. John P. Murtha (D-Penn.) added wording to the defense appropriations bill that would make the Air Force's request for funding for new aerial refueling tankers contingent upon compliance with eight recommendations from the Government Accountability Office regarding the contract. The GAO found that the Air Force service unfairly awarded the contract to Northrop Grumman and its partner, European Aeronautic Defence & Space, over Boeing. Defense Secretary Robert M. Gates has said a new winner will be named by the end of the year through a new bidding process.

Defense analysts called Murtha's move an attempt to exercise control over the tanker deal, and possibly delay it into the next administration.

LEGAL

Conn. Sues Rating Agencies

Connecticut sued three of the nation's leading credit rating firms, alleging they gave artificially low ratings to cities and towns that ultimately cost taxpayers millions of dollars in unnecessary insurance and higher interest payments.

State Attorney General Richard Blumenthal and state Consumer Protection Commissioner Jerry Farrell Jr. filed the lawsuit in Hartford Superior Court against Moody's, Fitch, and McGraw-Hill, the parent company of Standard & Poor's.

Anthony Mirenda, a Moody's spokesman, said that company officials considered the allegations to be "without merit." Fitch released a statement calling the action "an unfortunate development." McGraw-Hill also said that the lawsuit had no merit and that the company intends to fight it.

EARNINGS

Starbucks, which is closing stores and cutting office jobs amid weak U.S. sales, reported a third-quarter loss of $6.7 million compared with a profit of $158.3 million a year earlier. Revenue rose 9 percent, to $2.57 billion, mainly from sales at international stores and and new U.S. locations.

Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.