FleetBoston Financial Corp.
Chief Operating Officer Eugene McQuade commented this week on the seventh-
biggest U.S. bank’s corporate loan losses and the airline
industry. McQuade made the comments at a conference sponsored by
Salomon Smith Barney in New York.
“On the airline side, we’ve got a portfolio of about $1.5
billion in size. About half of that is what I would call credit
protected, that is foreign airlines that are either guaranteed by
a AA or better foreign bank or a sovereign; we feel very
comfortable on that part of the portfolio.”
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The other half is split equally between large domestic
carriers and a group of regional and commercial carriers, he said.
“Our concern is on the domestic national large carriers.
With US Air and United both declaring bankruptcy, how do American,
Delta, Northwest, Continental, etc., compete in that kind of
environment?
“Our belief is that there is going to have to be some kind
of restructuring that they go through, whether it’s a formal
restructuring such as bankruptcy, or informal such as wage
negotiations with their unions (or) getting their plane leases
restructured. Our outlook for the year is that there’s probably
$100 to $200 million of charges from that portfolio that we’ve
built into our number.”
Bloomberg News
