Tuesday, August 26, 2008
AIRLINES
Delta Taps $1 Billion Credit Line
Delta Air Lines drew on a $1 billion revolving credit line to boost its cash holdings as it prepares to acquire Northwest Airlines by year's end, Chief Financial Officer Ed Bastian said in a memo to employees.
Delta also extended a credit card processing agreement with Visa and MasterCard to 2011. The accord was set to expire in October, and IT doesn't require cash holdbacks or collateral.
Overseas Airfares JumpInternational airfares reached the highest levels in at least nine years in the second quarter as carriers raised prices to blunt record fuel costs, American Express Business Travel said.
Average one-way tickets for overseas flights from North America rose 11 percent, to $1,980, from a year earlier, the travel-services company said. That's the top price since American Express Business Travel began monitoring fares in 1999.
Domestic tickets climbed 10 percent, to $260, from 12 months earlier, the highest since 2001, American Express Business Travel said.
MERGERS & ACQUISITIONSCanadian Firm to Buy Grey Wolf
Canada's Precision Drilling Trust said it would buy Houston gas driller Grey Wolf in a cash-and-stock deal worth more than $2 billion. Under the agreement, Precision Drilling will pay $1.12 billion in cash and 42 million shares valued at $896.7 million, based on Friday's closing stock price.
The deal gives Precision access to land operations in virtually every oil and gas basin in the lower 48 United States and Canada, and an emerging presence in Mexico.
Broadcom to Buy AMD DivisionAdvanced Micro Devices will sell its unit that makes chips for digital TV sets to fellow chipmaker Broadcom for $192.8 million in cash, the companies announced yesterday.
AMD is selling the unit as part of a program to reduce debt and improve profitability, said Dirk Meyer, president and chief executive. The company is a distant second to Intel in its main market of computer processors, and competition has intensified.
The companies expect the deal to close by the end of the year. The AMD Unit has about 530 employees. They will be invited to join Broadcom.
ENTERTAINMENTNetflix Blames Faulty Hardware
Netflix is blaming a faulty piece of computer hardware for a breakdown that delayed millions of shipments to the online DVD rental service's customers from Aug. 12 to Aug. 14.
"We've taken steps to fortify our shipping system with the acquisition of additional equipment and worked with our vendors to verify we're in good shape elsewhere," Mike Osier, Netflix's technology chief, wrote on the company's Web site.
The outage, which prevented Netflix's 55 shipping centers from processing rental requests, affected about one-third of the service's 8.4 million subscribers. Netflix is giving the affected customers a 15 percent credit on their next monthly bill.
WALL STREETCoach Approves $1 Billion Buyback
High-end handbag and accessories maker Coach said that its board authorized a plan to buy back up to $1 billion of its common stock. The plan is to be completed by June 26, 2010, the company said.
The company also said it completed its current $1 billion repurchase program that was authorized in November 2007. The company acquired 31.8 million of its outstanding common shares stock under that program at an average cost of $31.42 each.
REAL ESTATETribune Co. Unveils Auction Firm
Los Angeles Times Media Group, a Tribune Co. unit that owns the Los Angeles Times, said it started a business that will auction distressed real estate. The media company said Zetabid opened for business yesterday, with its first auction of bank-owned and builder-owned homes set for Sept. 27 and Sept. 28. Zetabid also will operate a Web site on which people can register to participate in auctions and view listings online.
The move comes as media companies are increasingly losing real estate classified advertising to online sites, and Tribune Co. is searching for ways to recapture lost revenue at its newspaper properties.
TREASURY BILLST-bill rates fell. The discount rate on three-month Treasury bills auctioned yesterday fell to 1.71 percent from 1.85 percent last week. Rates on six-month bills fell to 1.925 percent from 1.98 percent. The annualized return to investors is 1.741 percent for three-month bills, with a $10,000 bill selling for $9,956.30, and 1.971 percent for a six-month bill selling for $9,902.68. Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, fell to 2.12 percent last week from 2.18 percent two weeks ago.
Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.
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