www.bayarea.com Posted on Sat, Feb. 15, 2003 By Edward Wong NEW YORK TIMES

Three top airlines increased nearly all their fares by $10 each way on Friday.

The move, the most significant fare increase for the industry since last summer, was an effort by the companies to re-establish pricing power as fares have hit record lows. But several industry experts raised doubts that the airlines would be able to keep the higher fares. With a war in the Middle East looming, travel has continued to slump, they say, and it will only become worse if the United States attacks Iraq.

The three airlines -- Continental Airlines, American Airlines and US Airways -- will also have to see whether their other top rivals decide to match the increase. If those companies -- Delta Air Lines, Northwest Airlines and United Airlines -- do not raise their fares, then the other carriers will probably have to back down.

People in the industry are watching Northwest in particular, because it did not go along with several fare increases last year, forcing its rivals to return to lower their fares.

Continental Airlines, the country's fifth-largest carrier, was the first to put the fare increase into effect on Friday morning.

"Although the airline industry is suffering from overcapacity and weak demand, this fare increase is necessary to get Continental back on the path to financial recovery," the company said in a statement.

Continental said the increase was necessary to help offset "dramatically higher fuel expenses."

American soon matched the increase, and US Airways had jumped on board by late afternoon, said Terry Trippler, an air fare expert.

Fuel is the second-highest expense for airlines, behind labor costs. In the past year, fuel prices have spiked, because of the oil crisis in Venezuela and tensions with Iraq, said John Heimlich, an economist for the Air Transport Association, the industry's main trade group. All the big airlines have a certain amount of their fuel hedged in case of the price of oil goes up, but they have not been able to avoid paying higher prices on the average.

The spot price for a gallon of jet fuel is now $1.20, more than double the 57 cents a year ago, according to the trade group. The price for West Texas intermediate crude oil is expected to be $34.25 a barrel this month, compared with $20.65 a year ago.

In December, airlines paid an average of 77.4 cents a gallon for jet fuel, up from the 60.1 cents they paid in December 2001.

The cost of crude oil, and thus jet fuel, will almost certainly go up if the there is a war in Iraq.

Even so, there is no guarantee that the fare increase will remain, experts said. That will depend on the market conditions for air travel, which are dismal right now. Furthermore, they said, carriers with relatively good cash reserves, like Northwest, can better afford to keep fare prices lower than some of their competitors.

"The airline industry needs it," Michael Boyd, an airline consultant based in Evergreen, Colo., said of the price increase. "Whether it'll stick is another issue. With war jitters out there and other things, I don't know whether it'll stick."

www.sun-sentinel.com By Tom Stieghorst Business Writer Posted February 15 2003 Congress has approved $50 million to jump-start travel from overseas, which has been declining since the Sept. 11, 2001, terror attacks. The money, in the appropriations bill passed this week, will be divided among the 50 states according to what they spent on overseas marketing last year. Florida attracts more foreign visitors than any state other than California and could get between 10 percent and 20 percent of the money, said a spokesman for Rep. Mark Foley, R-West Palm Beach, who was a primary sponsor of the bill. "Florida's largest industry is hemorrhaging, and this may bring us one step closer to the cure," said Foley in a statement. Funds could flow as soon as President Bush signs the bill, said Foley spokesman Chris Paulitz. "This could be turned around relatively rapidly," he said. Travel to the United States will likely decline further if the United States goes to war in the Middle East. Already European visitors are favoring vacations that don't require overseas flights. Latin American travel to South Florida has been curtailed by economic problems in countries from Argentina to Venezuela. "There is nothing we need more than U.S. marketing presence in the international marketplace," said Nicki Grossman, president of the Greater Fort Lauderdale Convention & Visitors Bureau. She said foreign visitors to Broward County are off 10 to 15 percent in the past 18 months. "Our Canadian business is holding steady. It's the other international, the Europeans certainly and also the South Americans," that are not coming in previous numbers, she said. In 2000, about 24 percent of Broward visitors were international. They tend to stay longer and spend more than domestic visitors, experts say. Florida attracted 6 million international visitors in 2000, according to the U.S. Commerce Department, which ranks California first with 6.4 million visitors, and New York third with 5.9 million. No other state has more than 3 million. Those figures exclude Canadian and Mexican travelers. The bill passed by Congress only included half of the $100 million Foley had sought and is limited to overseas marketing. Foley had sought to let states use the money to market to out-of-state tourists within the United States. Tom Stieghorst can be reached at tstieghorst@sun-sentinel.com or at 305-810-5008.

www.thehollandsentinel.net Web posted Saturday, February 15, 2003 In Brief - Business

WASHINGTON -- The United States, which struggled through a stop-and-go recovery last year, should see the economy steadily gain strength in 2003, according to a panel of prominent economic forecasters.

But that outlook from the National Association for Business Economics comes with an important caveat -- any U.S. war with Iraq ends quickly.

A panel of 37 top economists, who prepared NABE's latest quarterly outlook, said Friday that President Bush's call for a new round of tax cuts would provide a moderate boost to the economy this year and next.

But the forecasters said that an even bigger positive factor would be a quick resolution of the war, which would remove uncertainty that is holding back business investment plans.

Krispy Kreme shares increasing in value

WINSTON-SALEM, N.C. -- Shares of Krispy Kreme Doughnuts Inc. shot up Friday after the company said earnings in the current fiscal year would jump 35 percent above those of the year just completed.

Krispy Kreme said in a news release that it expects earnings of 88 cents a share in fiscal 2004, which began this month, and a 10 percent sales growth at its existing stores. Krispy Kreme also plans to open 77 stores in the next 12 months.

Shares of Krispy Kreme soared $2.75, or nearly 10 percent, to close Friday at $31.15 on the New York Stock Exchange.

General strike hurts Venezuela economy

CARACAS, Venezuela -- A general strike and lingering recession have taken a heavy toll on the Venezuelan economy, which shrank nearly 17 percent in the final quarter of last year, according to government figures released Friday.

The nation's oil sector, which accounts for about a third of gross domestic product, contracted by nearly 13 percent in the fourth quarter as thousands of workers walked off their jobs while the government of President Hugo Chavez worked to restore production.

Overall, the economy fell 16.7 percent in the fourth quarter and 8.9 percent for the entire year, Planning Minister Felipe Perez said Friday on a government Web site.

Most of the contraction in the economy was due to reduced oil production, a combination of Venezuela's adherence to lower production quotas established by the Organization of Petroleum Exporting Countries, followed by the general strike, which began Dec. 2.

TELECOM

France Telecom plan: Halve debt in 2 1/2 years

France Telecom hopes to cut its debt by nearly half, to a ``bearable'' level of about 35 billion euros ($37.9 billion) within 2 1/2 years, the company's chairman said Friday.

France Telecom's debt at the end of 2002 is expected to be about 68 billion euros ($73.6 billion), said Thierry Breton. He said debt will be cut by reducing the company's working capital and operating costs, and with ``marginal'' asset sales.

Costs will also be reduced through job cuts, although those will be from normal departures and retirements only, not layoffs, he said.

BANKING

Lloyds Group profit drops 40 percent

British bank Lloyds TSB Group on Friday reported a 40 percent decline in profit for the second half of 2002, blaming rising provisions for bad loans and a lingering bear market for stocks.

Net income for the period was 668 million pounds ($1.1 billion), compared with 1.1 billion pounds ($1.8 billion) a year earlier. The bank froze its dividend and said it would need to invest money in its pension fund to compensate for falling stock prices.

Rising provisions for bad loans and falling stock prices have also hit other British banks, including Barclays and Abbey National.

breaking.examiner.ie 15/02/2003 - 8:51:51 am Britain today remained on terror alert after a series of alarms and arrests amid heightened security at airports across the UK. A total of nine suspects have been arrested near airports in the north and south of England, while Heathrow’s Terminal Two was evacuated after a security alert yesterday. Six of the suspects were subsequently released from arrest under anti-terror laws. Five of them were later handed over to the Immigration Service. One man caught with a hand grenade getting off a jet at Gatwick airport on Thursday was still being questioned by anti-terrorism officers. Police in West Yorkshire arrested two men aged 25 and 26 on Thursday, and seized a car near the perimeter fence of Leeds/Bradford Airport. The men were still being questioned today. Roads have been closed around Stansted in Essex while security has been beefed up at airports in Manchester, Bristol and Birmingham since high-profile security measures were launched on Tuesday. Scotland Yard Deputy Assistant Commissioner Andy Trotter said the Metropolitan Police was doing all it could to protect the capital. “We’re taking every measure necessary to keep London safe and the evidence of our activity is out there on the streets. We’ll do everything that is required to deal with the threat that we perceive at the moment,” he said. Passengers were evacuated in a security alert at Heathrow’s Terminal Two, which was closed for an hour and a half. It reopened in the afternoon, after a suspect package was found. It turned out to be a false alarm. Scotland Yard revealed yesterday that four men in their 20s were arrested on Thursday afternoon in Langley, Berkshire, four miles from Heathrow Airport. They were later released from arrest under anti-terrorism laws but were kept in custody and handed over to the Immigration Service. Two other arrests made in the Hounslow area, near Heathrow, were described as not significant. One man was released yesterday and one handed over to the Immigration Service. Anti-terror squad detectives were still questioning the 37-year-old man from Venezuela caught with a live hand grenade in his luggage at Gatwick. Checks are being made in the capital Caracas to establish his background while he remains at high security Paddington Green police station in London. The man was on British Airways flight BA 2048 carrying 125 passengers from Bogota in Columbia. Passengers at Gatwick were immediately evacuated from the airport’s North Terminal after the grenade was found and outbound flights were suspended. Around 150 people were forced to spend the night wrapped in blankets. A BA spokeswoman said around 4,000 of its passengers were affected by the security alert. British Airways staff were travelling to Venezuela to investigate how the man managed to board a plane without the weapon being detected. At Stansted, the access road to the terminal was closed for five hours amid heightened security measures. It is understood the action was taken due to the arrival and departure of flights by the Israeli airline El Al to Tel Aviv, which are considered a potential target for terrorists. The road was guarded by armed police. High-profile security measures were first launched on Tuesday with the dramatic deployment of light tanks at Heathrow. More than 400 soldiers and around 1,700 extra police officers were drafted in to Heathrow and other key London locations. Police and government ministers say the move was the result of “specific intelligence” about a terrorist threat. It is believed to have included the possibility that al Qaida terrorists have smuggled a shoulder-held rocket launcher into the UK and might try to shoot down a plane. Police and government ministers would only say that the move was the result of a “specific threat”. At Heathrow yesterday, passengers refused to be intimidated by the terror threat. Stephanie Nelson, 26, from Chicago, who had arrived for a short holiday in London, said: “It’s scary but I’m not going to let it stop me from flying. “Life has to go on. The police are doing everything they can to stop another incident like September 11 happening.”

www.globeandmail.com By MARIAN STINSON Saturday, February 15, 2003 - Page B1

North American markets heaved a sigh of relief yesterday and stocks, bonds and the U.S. dollar rallied after UN weapons inspector Hans Blix asked for more time to determine whether Iraq has disarmed.

On Wall Street, the Dow Jones industrial average of blue-chip stocks rose 158.93 points or 2.05 per cent to 7,908.80 by the closing bell while in Toronto the S&P/TSX climbed 34 points to 6,487.13.

"Into the weekend there's a feeling that we have time to breathe and there will be no war for at least a couple of days," said Andrew Pyle, a senior economist at Bank of Nova Scotia. "It's an amazing shift in mood from Thursday," when fears of terrorist attacks and a war with Iraq triggered widespread losses, he added.

"The tone of the Blix report was so dovish that it puts the onus on the U.S. to come up with something" to justify an attack on Iraq, he said. "Now there is a sense that nothing will happen immediately."

Mr. Blix told the Security Council in New York that the inspectors found no weapons of mass destruction in Iraq but the country has not accounted for all of its prohibited weapons.

Stock prices bounced back after falling in seven of the past eight days, said Scott Kinnear, an analyst with MMS International. "Buyers were picking their spots, he added, since "stocks of some high-quality companies have been battered in the last two weeks."

News that U.S. industrial production was higher than expected last month also improved equity market sentiment, he added.

The U.S. dollar moved higher against the euro, the Swiss franc and the Canadian dollar, which fell by one-quarter of a cent to end the day at 65.66 cents (U.S.), down 0.23 cents from Thursday. The greenback strengthened to 1.0791 for each euro from 1.0832 the previous day.

Oil prices continued to climb above $36 a barrel as supply pressures persisted, not only because of the situation in the Middle East, but also as a result of the general strike in Venezuela and a pending strike by oil workers in Nigeria.

Even though a war with Iraq could be delayed, there still could be supply disruptions from there, Mr. Kinnear said.

Gold prices dropped sharply by $5.50 an ounce to $352.20 as fears of an imminent war eased.

Bond markets also shed some war fears, as prices fell for the first time in four days on the prospect that an attack on Iraq is not imminent. The 10-year U.S. Treasury issue dropped by $6.25 for each $1,000 in face value, lifting the yield by eight basis points to 3.96 per cent.

"In a week when duct tape was the hottest purchase in the U.S. and stocks were on the ropes, it's little surprise that Treasury yields fell across the board [this week]," Sherry Cooper, chief economist at BMO Nesbitt Burns, said in a commentary. The 10-year yield on U.S. Treasury bonds fell below 3.9 per cent this week for the first time this year and the two-year yield dropped below 1.6 per cent.

U.S. markets are closed on Monday to commemorate Presidents' Day.