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Show i DAILY Tuesday, February 26, 2008 HERALD BS deal Investors, analysts losing patience on Northwest-Delt- a Lit Fedor STAR Richard Anderson, who would lead the merged airline, cannot wait indefinitely for the problem to be resolved, so Maldutis suggested that the pilots could be facing an early March dead- TRIBUNE MINNEAPOLIS A veil of silence has shrouded the pilot leaders at Delta Air Lines and Northwest Airlines who are struggling to integrate their seniority lists the lone impediment to a merger announcement. Management for the merged carrier already has reached agreement with the pilots on a tentative labor agreement that includes pay raises for Delta and Northwest pilots. But pilot leaders declined to comment Monday on their conflict on the seniority issue. "The two pilot groups appear unable to reach a decision on seniority, but would not want to be blamed for the cancellation of a merger," Julius Maldutis, president of New York-baseAviation Dynamics, said Monday. He added that Delta CEO d Health care McK-enzi- e, government, and government economists predicted that trend will continue. Now, Continued from B6 about one in six beneficia- nearly $178 billion over five years, but have little chance of passage in Congress. Health and Human Services Secretary Mike Leavitt has acknowledged the unpopularity of the recommendations, but he said politicians must make some hard decisions. The longer lawmakers wait, the more difficult the decisions will be. "Medicare, on its current course, is not sustainable," Leavitt said. line. Some on Wall Street already are losing patience. "Given the spike in crude to $100 per barrel and economic concerns that continue to snowball, we find it odd that the pilots are controlling the strategic direction of Northwest and Delta," Daniel a Credit Suisse airline analyst, wrote in a report. When Delta and Northwest merger talks got serious in January, the two airlines chose to involve their pilot groups as partners. In making that overture, they were in step with the philosophy of John Prater, president of the Air Line Pilots Association, which represents pilots at Northwest and Delta. "We have told the manage ries get their health benefits through a private plan. By 2017, more than one in four beneficiaries will get their coverage that way, Medicare officials said. Health experts tell Congress that Medicare pays much more for each beneficiary who opts for a private plan than it would if they stayed in the traditional Medicare program, which reimburses providers at a set fee for a particular service. That differ ence increases the burden on taxpayers as well as beneficiaries, because participants pay higher monthly Medicare - Democratic lawmakers also have proposed ways to slow health spending, primarily by trimming payments to private insurers who oversee health coverage for nearly 9 million Medicare beneficiaries. A growing number of the nation's elderly and disabled are electing to get health coverage through private plans that contract with the federal premiums. The government economists say it's hardly a new trend that the health care sector will grow more quickly than the overall economy. Over the past 30 years, health spending ments and the investment community that if consolidation is going to happen, they must come to ALPA first," Prater said in a December interview. "We can make mergers work, or we can destroy them." Ironically, now the ALPA groups at Delta and Northwest are in the political hot seat, because the airlines' executives want the pilots to reach a seniority deal before they are willing to publicly propose a merger. "They can proceed without an agreement," Phil Baggaley, credit analyst for Standard & Poor's, said in a Monday interview. "The risk is that that provokes somewhat of a labor backlash and ends up being a distraction as has been the case at US Airways." US Airways and America West merged in 2005, but the pilot groups failed to integrate their seniority. Last May, arbi has exceeded growth in the gross domestic product by about 2.7 percentage points each year. Over the coming decade, that difference is expected to narrow slightly. Still, the continued gap is worrisome, said the agency's acting administrator, Kerry Weems. He said consumers, particularly businesses, need more information about the quality and cost of care. "We have an approaching crisis in this country unless we change the way we do business," Weems said. Within the health sector, economists project that spending on hospital care will increase at rate of 6.9 percent a year over the coming decade, spending on physician services will rise 5.9 percent annually, and spending on nursing homes will grow 5.2 percent per year. The economists' report will be published online by the journal Health Affairs. trator George Nicolau issued a seniority integration decision, which quickly drew a lawsuit from the US Airways branch of ALPA. The Northwest ALPA executive council met Thursday and Friday, but there was no negotiated seniority list for that body to vote on. Instead, the council said it "remains steadfast and in full agreement that any consolidation must have a reasonable and beneficial seniority list integration for all pilots." Pay raises and other con- which there would be a limited scope for the arbitrator's work. "Management would not want to risk an open, unrestricted arbitration." John Peterson, a pilot who retired from Northwest in November, said Delta's Anderson wants to sidestep the labor unrest that could flow from an arbitrator's decision. "If an arbitrator makes the decision, someone will feel like they won and someone will feel like they lost," said Peterson, who previously practiced law. tract improvements are linked to the realization of a merger. "From the perspective of the pilot leadership, I expect they would have to weigh the risk of forgoing pay increases if the deal collapses and there is no merger," Baggaley said. "One way to keep this thing alive," Maldutis said, "is to reach an agreement on a special arbitration agreement" in seniority lists for the Northwest acquisition of Republic Airlines in 1986. "The Northwest pilots enjoyed a tremendous financial advantage over the Republic pilots for 20 years" because the arbitrator erected a fence around them that ensured they received good flying assign ments, Peterson said. Visa increase in profit. An arbitrator integrated the That Visa could end up launching the country's bigContinued from B6 gest IPO is "not surprising," processor not a lender so Woolsey said. "They're the it makes its money through dominant payment player, fees from the banks issuing with well over 50 percent of the global payment credit card its cards and the merchants volume." accepting them. And like MasIn the United States, Visa is terCard, Visa could see more struggling consumers increas- the largest card company by market share, and has a strong ingly use their cards for such high-cos- t necessities as health presence in other countries, care, food and gasoline, which where many people are just could boost the fees Visa earns. starting to use plastic instead of cash. The 44 billion transacDelaying the IPO process tions totaling about $3.2 trillion would "be like turning around a massive steamship, and could that Visa processed in 2006 raise speculation about what's nearly doubled the number of transactions by MasterCard, wrong," Woolsey said. The its biggest competitor. company has been planning Visa boasts the world's bigfor an IPO this year since a f il- -' ing with the SEC in June. gest retail electronic payments Another possible reason to network. According to its filget the IPO done this spring is ing, as of Sept. 30, banks and this summer's Olympic Games other customers said they had in Beijing, for which Visa is an issued 1.5 billion Visa cards. The latest Nilson Report on official sponsor and the exclusive credit-car- d card companies said that in provider. Visa will be the last of the 2006, Visa had 44 percent of the U.S. market share in cards major U.S. card companies to and 48 percent of the U.S. margo public. MasterCard raised ket share in debit cards an $2.39 billion in its IPO nearly two years ago. Its shares have even market risen fivefold since then and than credit cards. Visa's IPO, even if it prices are trading at more than $200 each, but have fallen more than at the low end of the estimated 5.5 percent since the beginning range, would surpass the $ 10.6 billion AT&T Wireless of the month. Discover Financial Services LLC became publicly traded last July, and since then has seen its shares tumble. But Discover, like American Express, is a true card lender. The responsibility for Visa and MasterCard cardholders' debt, in contrast, is held by the banks that issue them. For their most recent quarters, Discover posted a loss and AmEx reported a 10 percent drop in earnings while MasterCard posted a huge faster-growin- in wireless service could make a difference for Qwest. "They want to offer an Continued from B6 integrated solution to you as said he believes Qwest has a lot a customer," he said. "They want to lever the brand." to accomplish to deliver a In such a partnership, wireless product. "We need a partner, not Qwest could offer out-o- f wireless companies an only for voice, but we need a entrance into Qwest's region partner for data and broadband data," he said. "So, as and, in return, receive a service for customwe look forward, we need somebody to help us with both ers, Comack said. of those. And so we will be It also would give Qwest a better wireless product for looking at everybody, includ-in- g its bundled packages of highSprint." " Zachary Investment speed Internet and satellite Research analyst Patrick television services, Comack said. That "could reduce the Comack, who attended Monday's meeting, said the change number of customers who Qwest state-of-the-- egion state-of-the-- stop Qwest service. Mueller also announced an expansion of the company's or neighborhood, program in 23 cities ranging from Bellingham, Wash., to Santa Fe, N.M., with the goal of passing 1.5 million houser-to-node, holds. For 2008, Qwest expects low single-digrevenue it growth overall and adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, that would be flat to 2 percent higher than 2007. Qwest's stock rose 33 cents to close at $5.60 per share in Monday trading. g custom stairway elevator allows FREEDOM OF MOVEMENT in the home of your choice, removing the physical challenges imposed by stairs. Anderson, a former Northwest CEO, "wants to avoid that if at all possible" in a merger, Peterson st said. Bill Swelbar, an airline expert at the Massachusetts Institute of Technology, said there also are financial reasons to secure a pilot agreement up front. "The fact that they will not proceed without an integra- - . tion deal suggests that they are convinced that with an agreement in hand, the combined carrier can move quickly to leverage each route network across the other network and create the revenue synergies fairly quickly," Swelbar said. If an agreement is negotiated in advance of a merger announcement, the two pilot groups also would be expected to be political allies for a merger during a regulatory review in Washington. raised in 2000 when it went public. And if demand is strong enough, it could be almost as big as the two largest past deals combined AT&T's of- fering and Kraft Foods' $8.7 billion IPO in 2001. At a midpoint price, Visa could raise about $15.6 billion, or more than $ 17 billion if underwriters exercise their option to buy the entire lot of 40.6 million shares. Even at the low-en- d price of $37 a share, Visa would raise about $15 billion. About $3 billion will go toward Visa's litigation costs, including suits brought by U.S. and foreign regulators over alleged restraint of competition, and over interchange fees the fees merchants pay to complete transactions through Visa's system. These legal battles could make investors hesitant to buy into the upcoming IPO. The rest of the proceeds will be used for general corporate purposes. Visa said it intends to pay d shareholders an annual of 42 cents per share. The shares will be listed with the New York Stock Exchange under the ticker V. divi-den- I AP business writer Michael Lee contributed to this report. A Stairway elevator features include: Battery backup for use during a power failure Easy fold-u- p leaving the stairway clear for use by others Swivel seat for ease and safety when getting in and out of the chair Call toll free 1 - 800 - 735 - 0408 ft? M Stannsh r' LOSEE Jewelers ' Square (801) Only in CottonTree mwo moo m mam university rawy us, www. the ELEVATOR company. - &: kKMjewt im.nct ju pm 373-100- 0 until apm -- the Savvy Shopper inrMniiwiaiMTiiiii iiiiaim - yilWIWHIIIIWlfiMr Price good through 32 Price good through 31 www.sctwy shopperdeals.com Springville Only I ''shopper fUML VisinB . 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