Business news in brief

QUOTE OF THE DAY

“The average person may be bewildered by the Fed’s concern about deflation.”

Allen Sinai,

chief economist at Decision Economics Article, 1D

Blockbuster filing said set for today

Blockbuster Inc. is set to file for bankruptcy today in New York before the stock market opens, using a $125 million loan to reorganize so it can compete with rivals such as Netflix Inc. in renting movies online, according to a person with knowledge of the planned petition.

Billionaire investor Carl Icahn, who bought about one third of Blockbuster’s bonds, will join with a group of creditors in swapping their debt for all of the video-rental company’s stock, according to the person and two others who declined to be identified because the discussions are private.

Blockbuster, saddled with more than $900 million in debt, has stopped paying interest to its lenders. The company, led by Chief Executive Officer James Keyes, has said it may have to file for bankruptcy as it tries to restructure its operations and finances.

AMR shares drop 8% on soft outlook

DALLAS - Shares of American Airlines parent AMR Corp. tumbled by 8 percent Wednesday morning after the company’s outlook for stronger revenue failed to impress some analysts.

The company said late Tuesday that third-quarter unit revenue, or total revenue divided by available seats times miles flown, would grow between 9.8 percent and 10.8 percent compared with a year ago.

But at a time when many airlines have been increasing revenue with higher fares and fees on checked baggage, the comments of two analysts suggested that AMR’s outlook wasn’t rosy enough.

JPMorgan analyst Jamie Baker said the outlook “paints a softer-than-expected 3Q outcome.” He cut his forecast of AMR’s third-quarter profit by more than half.

Dahlman Rose & Co. analyst Helane Becker said the outlook would cause the consensus view among other analysts to fall. She said she continued to avoid owning AMR shares.

AMR was the only major U.S. airline to lose money in the second quarter.

AMR shares fell 60 cents, or 8.7 percent, to close at $6.28.

GM’s Opel to start Chile sales in ’11

BERLIN - General Motors Co.’s Opel unit said Wednesday that it will begin selling cars next year in Chile, its first Latin American market.

Opel increasingly is looking to markets beyond its European base as it works to return to profitability.

The company said that it is “currently preparing to enter more growth markets.”

It didn’t give details but noted that it already has signed a memorandum of understanding with Shlomo Group to export cars to Israel.

Michael Klaus, the executive director of Opel international operations, said that “German automotive engineering has a high appeal in South America and we are glad to start with Chile.”EU criticizes U.S. for $14 visitors fee

European Union lawmakers criticized the U.S. for imposing a $14 fee on foreign visitors, raising the possibility of retaliation with a levy on American travelers to the EU.

The U.S. introduced the tax earlier this month to fund tourism promotion under a law sought by companies such as Marriott International Inc., Walt Disney Co. and American Express Co. Travelers from 36 countries including France, Germany and the U.K. face the charge when registering to visit the U.S. for as long as 90 days without a visa, with the fee being payable once during a two-year period.

“A new type of visa has been invented,” Elmar Brok, a German member of the European Parliament, said during a Wednesday debate on the U.S. measure in Strasbourg, France. “It’s unbelievable. It’s a unique business model; they are getting consumers to pay for advertisements.”

The American tourism industry is betting the fee will help overcome a 2.4 million decline in overseas visitors last year from 25.9 million in 2000, according to a U.S. Travel Association report. President Barack Obama signed legislation in March to institute the charge, which the association had pushed for since 2007.

The travel-promotion fee is $10, with the Homeland Security Department taking $4 for application processing. The law expires Sept. 30, 2015.

The European Commission, the EU’s regulatory arm responsible for managing the bloc’s visa policy and for proposing laws, left open the possibility of a similar tax on U.S. visitors to Europe.

EU approves financial-oversight law

BRUSSELS - The European Union Parliament has approved new financial-oversight institutions aimed at preventing another financial crisis like the one that led to bank bailouts at taxpayer expense.

The parliament overwhelmingly backed the plan to set up watchdog boards for the financial markets, banking and insurance sectors in addition to a European board to make sure the EU can avoid new crises.

The institutions should become active at the beginning of next year.

Parliamentary approval in Strasbourg, France, was the last hurdle for the plans, which were hailed as a major step forward in unionwide financial management. The EU member states had already approved them earlier this month.

Key in the setup is the Frankfurt-based European Systemic Risk Board, which will have to make sure the EU as a whole will be much better prepared to contain any financial crisis. It comes after financial near-collapse in Greece last spring threatened the stability of the euro currency.

Gillette stadium deal extended to ’31

CINCINNATI - The Procter & Gamble Co. plans to keep the Gillette name on the home of the New England Patriots through the 2031 football season.

The Cincinnati-based consumer-products maker said Wednesday that it has extended its sponsorship and naming-rights deal by 14 years with The Kraft Group, the holding company for the family who owns the Patriots and stadium in Foxborough, Mass. Financial terms weren’t disclosed.

The Boston-based Gillette Co. signed a 15-year deal for naming rights in August 2002, in time for the Patriots’ first regular-season home game.

P&G, whose other brands include Tide detergent and Pampers diapers, obtained the shaver maker in 2005. Since taking over the longtime sports marketer, P&G has become a sponsor of National Football League and the U.S. and International Olympic Committees.

The stadium is also a major concert venue and home to Major League Soccer’s New England Revolution.

Business, Pages 26 on 09/23/2010

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