GE Reports $4.4 Billion in Exposure to US Airways and United Airlines

General Electric Co. said Tuesday it set aside an unspecified amount to cover $4.4 billion in loans and other obligations to struggling airlines US Airways and UAL Corp.’s United Airlines.

The company also may have to write off about $800 million in investments held by its insurance businesses, it said in a filing with the Securities and Exchange Commission.

The amount of exposure to the two airlines was GE’s first specific disclosure in a quarterly SEC filing.

Analysts and investors have been watching GE closely to see what sort of losses might result from the turmoil that has rocked U.S. airlines. GE is a big lender, in addition to being a major manufacturing conglomerate.

GE spokesman David Frail noted that the firm’s commitments to the two airlines are secured by individual aircraft or pools of aircraft engines.

For the first time, GE also made specific disclosures about its exposure to the telecommunications and cable industries in its quarterly filing, Frail said.

GE said its investments and commitments to customers in the telecom and cable industries were about $12 billion at the end of September, primarily in financing receivables and investment securities. GE said it has made provisions for probable losses, but didn’t provide details.

“Future losses will depend upon business and economic developments as well as the success of risk-mitigation actions,” GE said in the filing.

Meanwhile, GE said about $800 million in securities, mostly investment-grade debt held by GE Insurance units, are at risk of turning into losses for the company. The securities are part of a massive portfolio valued at about $115 billion at the end of September.

GE’s losses on investment securities were $679 million through the first nine months of 2002, the filing said. A little more than half stemmed from the telecommunications and cable industries.

GE shares closed down 40 cents to $25.85 on the New York Stock Exchange.

CSFB Fires About 400

Investment Bankers

Brokerage Credit Suisse First Boston has fired about 400 investment bankers as the investment giant pares operations to deal with depressed markets, according to people familiar with the situation.

Credit Suisse’s cuts come after Chief Executive John Mack warned earlier this month he would eliminate as many as 1,750 jobs, or 7% of the firm’s workforce of 25,000.

The firings, three months before annual bonuses are to be paid, are the latest wave of securities industry job cuts that have totaled more than 54,000 since May 2001.

Although Credit Suisse ranks second in providing merger advisory services this year, the total value of merger transactions worldwide is $144 billion, compared with $331 billion in the same period last year.

Credit Suisse’s cuts total about 20% of its investment bankers.

That department now numbers about 1,800. Many of the firings have occurred at the firm’s Palo Alto-based technology unit headed by Frank Quattrone, sources said.

Credit Suisse last week fired about 100 people in its research department, including chief market strategist Tom Galvin.

From Bloomberg News