Monday AM June 30th, 2008

Another hike in fuel costs for military units fighting in Iraq expected this week...Delta Air Lines to add surcharges of $25 or $50 roundtrip on frequent flyers' free tickets...Visa to reduce transaction fees for gasoline retailers...
Military units fighting in Iraq and elsewhere will see another hike in fuel costs this week. The cost increase will be the second time the Defense Department has had to raise rates in the middle of the budget year because of soaring oil prices. On July 1st, the cost for refined fuel will jump from $127.68 a barrel to $170.94. That is an astounding 34 percent jump in just six months and more than double what was being paid on behalf of the troops three years ago. The new costs translate to about $4.07 a gallon for jet fuel and $4.70 a gallon for diesel. A Pentagon spokesman said the price increase is needed to cover an anticipated $1.2 billion rise in fuel costs in the next three months. He said it will not affect ongoing military operations, but could affect daily support activities.

Delta Air Lines says it's going to start adding surcharges of $25 or $50 roundtrip on frequent flyers' free tickets to help offset soaring fuel costs. The lower fee applies to flights in the U.S. and Canada. The $50 surcharge will be tacked on to trans-Atlantic and trans-Pacific flights, as well as on routes to the Caribbean and Latin America. The change takes effect on sky miles award tickets issued starting August 15th. Skymiles Managing Director Jeff Robertson calls it a "`difficult but essential" decision and he hopes it is temporary. He says if fuel prices come down, Delta officials will re-evaluate the surcharge.

Pilots for American Eagle announced they've agreed with the airline to reduce layoffs. The agreement includes voluntary leaves of absences and part-time flying for pilots at Eagle, the sister carrier to Fort Worth-based American Airlines. Both are owned by AMR, which last month announced American Airlines and Eagle would cut capacity this year and reduce an unspecified number of jobs. The moves come as the airline industry faces dramatically higher fuel prices. American plans to cut eight percent of its management and support employees. The deal with the Eagle pilots also calls for ten aircraft leased to Trans States Airlines to be returned to Eagle beginning early next year. Union officials say that could save 100 pilot jobs. Pilots have complained about Eagle outsourcing some St. Louis flights to Trans States and another regional carrier.

Continental Airlines pilots have until early August to decide whether to participate in an agreement to reduce the number of pilots to be laid off with recently-announced capacity reductions. The agreement focuses mostly on three programs, including an enhanced retirement window, company-offered 18-month leaves of absence and voluntary reduced flying. A system-wide change in pilot scheduling rules reducing time in the air will create the effect of saving 100 to 150 pilot jobs.

New Mexico Airlines is dropping service between El Paso and Carlsbad on July 14th. Airline President Gabriel Kimbrell says the route was eliminated after decisions by Carlsbad and Eddy County authorizing public money and resources in an effort to recruit competition--an airline using 36-seat airplanes. New Mexico Airlines operates a single-engine, nine-passenger aircraft. The county and city joined Roswell and Hobbs to explore the possibility of attracting regional or intrastate air service. New Mexico Airlines will continue flying between Carlsbad and Albuquerque. It has a federal essential air service contract through next June.

Visa says it will reduce the transaction fees it charges gasoline retailers, who have complained that their profits are being eroded by them. The fees are a fixed percentage of every transaction, usually under two percent. So each time gasoline prices go up, so does the dollar amount of the fees, eating away at profit margins. With gas topping $4 a gallon, that pushes fees toward 10 cents a gallon, close to the typical gas station's markup of 11 or 12 cents per gallon. The credit-card company said its changes will lower fees by 14 percent on a $60 fill-up, and by 43 percent on a $120 gasoline sale. Visa also said it would cap its fee for debit-card purchases at 95 cents. Mastercard last year capped interchange fees for gas purchases of $50 or more. The National Association of Convenience Stores says that its members paid roughly $7.6 billion in credit card fees last year, while making $3.4 billion in profits.

The Federal Reserve says it was trying to avoid a financial "contagion" when it took unprecedented actions to back a Bear Stearns rescue package and provide emergency loans to big Wall Street firms. The Federal Reserve has released documents on its private deliberations in March that led to some controversial decisions. The Fed's actions came at a time when credit and financial problems were intensifying, threatening to paralyze the entire financial system and plunge the economy into a recession. Given the fragile conditions of the financial markets at that time, the Fed said it felt compelled to intervene because an "immediate failure" of Bear Stearns would bring about an "expected contagion." The Fed agreed to provide backing so that JP Morgan would take over Bear Stearns.

The U.S. Department of Labor's Homeless Veterans Reintegration Program and Veterans' Workforce Investment Program have awarded Goodwill Industries of Houston a $300,000 job training grant. The money is part of 103 grants, totaling nearly $30 million, to provide some 19,000 veterans with job training nationwide.

Shell Oil plans to modernize and expand its 33-year-old Westhollow Technology Center in Houston. It will be renamed Shell Technology Center-Americas. Most employees from Shell's Bellaire Technology Center will move to the renovated Westhollow facility on State Highway 6.

American International Industries has entered into a non-binding agreement to acquire Conroe-based Shumate Machine Works, according to the Houston Business Journal. It's a $6.7 million deal, including $1.7 million in assumed liabilities.

Tennessee Congressman Jim Cooper has been accused of accessing internal documents from a national trade group representing electricity cooperatives. But Cooper says he's being attacked for investigating their operations. National Rural Electric Cooperative Association CEO Glenn English appeared before the U.S. House Committee on Oversight and Government Reform. The hearing focused on salaries and spending at the Johnson City-based Pedernales Electric Cooperative. In his testimony, English said Cooper was being investigated by the FBI for breaching the company's Web site. But Cooper said he was given a password to get into the site from a "top co-op insider" and the lawmaker showed documents he'd downloaded. Texas State Senator Troy Fraser testified that a former general manager of the Texas cooperative was paid $375,000 a year, was given another $2 million in deferred compensation and a $375,000 signing bonus. During the hearing, English declined to criticize individual cooperatives, saying that his group is a trade association--not a regulator.

Texas-based Uranium Resources has backed out of a deal to buy uranium mining company Rio Algom Mining. Uranium Resources Chief Executive David Clark says current market conditions prevented his company from securing the $180 million--needed to finance the acquisition. Uranium Resources agreed last October 12th buy Rio Algom from Australian mining company BHP Billiton. Uranium Resources was to pay BHP $110 million and assume certain liabilities. Uranium Resources also was to pay BHP $16.5 million contingent on getting a federal license to build and run a conventional uranium mill. One of Rio Algom's main assets is a uranium mine mill site about 20 miles north of the city of grants, New Mexico. Uranium Resources had planned to build a milling facility at the site.

British mortgage lender Bradford & Bingley's shares fell 20 percent after reports that financier Clive Cowdery had dropped his proposal to inject $792 million into the company. That's a proposal by Fort Worth-based Texas Pacific Group to take a 23 percent stake in the company for $354 million. Cowdery's company, Resolution Limited, says it's withdrawing because of opposition from Bradford & Bingley's board, which refused to open its books to resolution. That apparently leaves the way clear for the board's preferred approach. Coupled with that would be a rights issue to raise $508 million. Resolution says it had been invited by major Bradford & Bingley investors which oppose the TPG plan. Standard Life, Legal & General, Prudential and Insight hold a combined stake of 13 percent in Bradford & Bingley and were concerned that the TPG proposal would dilute their holdings.

Chrysler says one of the new options that'll be available on 2009 Chrysler, Dodge and Jeep cars and trucks is a feature it calls the "Uconnect" system. It will effectively turn the vehicle into a wireless Internet hotspot. The company says people will be able to use laptop computers in their cars and trucks just as if they were in an office or home. It will also link cellular telephones and personal music players to the car's onboard electronics. The system also has navigation and real-time traffic features, controlled by voice recognition or a touch screen. And, it includes an in-car 30-gigabyte hard drive, with options for three-channel satellite television and satellite radio. The cost is expected to be about $500, plus activation and monthly service fees.

The government will investigate a stealthy form of advertising in which products are featured on television shows as props and at times even woven into story lines. The Federal Communications Commission says it will consider new rules to make it clear to viewers when brand-name products appear in shows in exchange for money. Spending on so-called "embedded advertising" has grown as advertisers look for new ways to reach viewers who flip channels during commercials or use digital video recorders like Tivo to fast-forward past them. One television show, "7th Heaven,'' featured Oreo cookies as a major plot element in two episodes.

A federal appeals court has upheld the Federal Communications Commission's authority to make rules intended to increase cable television competition. Local governments had filed legal challenges to agency rules the FCC said would speed the approval process for new competitors, cap fees paid by new entrants to local governments and ease requirements that competitors build systems that reach every home. The lawsuits said the FCC overstepped its authority. The lawsuits were consolidated in the 6th U.S. Circuit Court of Appeals in Cincinnati. A three-judge panel has ruled unanimously for the FCC. It said the agency showed the local franchising process was "unreasonably impeding competitive entry into the cable television market."

Bio photo of Ed Mayberry

Ed Mayberry

Local Anchor, All Things Considered

Ed Mayberry has worked in radio since 1971, with many of those years spent on the rock 'n' roll disc jockey side of the business...