- The Washington Times - Wednesday, March 26, 2003

Here is a look at Wednesday's top business stories:


Sears may sell credit card business

HOFFMAN ESTATES, Ill., March 26 (UPI) — Sears Roebuck & Co., the nation's largest department store chain, said it may sell its $30 billion credit card portfolio, in an attempt to create value for all investors and focus on its profitable core retail and related services business.

Sears said its credit and financial products business manages the nation's eighth largest credit card portfolio with $30.8 billion in card receivables at year-end 2002, representing approximately 25 million active accounts.

The business has the nation's largest in-house, proprietary card portfolio with $18.4 billion in Sears Card receivables, as well as $12.4 billion in MasterCard receivables. The business generated more than $1.5 billion of comparable operating income in 2002.

Alan J. Lacy, chairman and chief executive officer, said, "Sears' credit and financial products business is extremely attractive and highly profitable.

"It continues to perform well and is on track to deliver on its 2003 financial plan. However, we believe the tremendous value and earnings power of these assets are not reflected in today's market valuation of Sears. By selecting the right strategic partner for this unique business, we believe we can create significant value for our investors," Lacy said.

"This strategic action will support our sharpened focus on strengthening and growing Sears' profitable Retail and Related Services business, while further streamlining our organization, reducing leverage and returning cash to shareholders," Lacy added.

The company added that it expects to conclude its review of strategic alternatives for the business and take any related actions that arise from this review in the second half of 2003.

Sears, Roebuck and Co. operates approximately 870 full-line stores.


British Airways cuts routes and jobs

LONDON, March 26 (UPI) — British Airways Plc said it will cut capacity by 4 percent in April and May and accelerate its job-cuts program in response to the war in Iraq.

The United Kingdom's largest carrier said the reductions will apply mainly to trans-Atlantic and Middle East routes and will also be achieved by using smaller Boeing 777s instead of 747s in some cases.

British Airways would not comment on forward bookings or revenues but said, after the two months of capacity reductions, it is hopeful summer will be "business as usual."

In the meantime the airline said it has approximately $4 billion in cash and committed facilities available.

"We will survive this conflict," Chief Executive Rod Eddington said.

The airline has already cut flights to Kuwait, Israel and United Arab Emirates since the outbreak of war. It will resume one flight a day to Tel Aviv from London on March 28 but is slashing trans-Atlantic capacity by 6 percent in response to falling demand for air travel.

Last February, British Airways announced plans to cut 13,000 staff by March 2004 as part of its Future Size & Shape restructuring program.

It has already cut 10,000 staff to date, but Wednesday brought forward the deadline for the remaining 3,000 jobs to September this year.

The airline also extended its policy of allowing staff to take unpaid leave reducing the minimum length of leave without pay to one month from three months.

BA's Chief Financial Officer, John Rishton, said the move would bring forward the planned savings on manpower costs.

BA's routes reductions follow similar moves by most of the U.S. carriers as well as KLM Royal Dutch Airlines, Iberia SA and Deutsche Lufthansa AG.

BA also said it is suspending one of its seven flights a day between London Heathrow and New York JFK and canceling one of its two daily London services to Chicago until April 8. It is also delaying the introduction of extra summer services from Heathrow to Newark and Toronto and London Gatwick to Houston.

BA said capacity to the Middle East had been cut by 26 percent.


Mortgage applications decline

WASHINGTON, March 26 (UPI) — The Mortgage Bankers Association of America said Americans filed fewer mortgage applications last week after the previous week's record volume due to a drop in refinancing as mortgage rates rose for a second consecutive week.

The MBA said despite the fewer applications weekly volume of loan applications to buy a home rose to its highest level since late November.

The Mortgage Bankers Association of America said its weekly seasonally adjusted index gauging mortgage application activity for the week ended March 21 fell 9.1 percent to 1,520.9 from a high of 1,673.4 a week earlier.

The MBA said its seasonally adjusted gauge for refinancing fell 13.3 percent to 8,135.7 from the prior week's all-time high of 9,387. The decline was the largest for the index in nearly four months.

But the refinancing index's 4-week average rose to 8,264 from the prior week's 7,727.9.

The group's seasonally adjusted mortgage index for home purchases rose 10.5 percent to 383.7. The latest reading was at its the highest level since the week of Nov. 29, when the index stood at 386.6.

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