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Business for Banks, Phone Firms Slows

Transportation concerns also hit hard. Financial markets avoid trouble. An economist says 'the timing is relatively good.'

August 15, 2003|James F. Peltz | Times Staff Writer

Airlines sat on the tarmac, UPS drivers were idled and hot, tired New Yorkers couldn't get a frosty drink from Starbucks.

An untold number of businesses were affected by the power outage that hit the Northeast and upper Midwest on Thursday. Telephone companies found their lines jammed or not working at all. Many of J. P. Morgan Chase & Co.'s automated-teller machines shut down.

The heart of the auto industry was also hit; there are more than a dozen auto-manufacturing plants in Michigan, Ohio and eastern Canada. "All of our plants in the affected areas were impacted," though it wasn't immediately known how much production was slowed, said Pat Morrissey, a spokesman for General Motors Corp. in Detroit. "We're still assessing the situation."

Financial markets appeared mostly unscathed, however. The lights went out just after the New York Stock Exchange's closing bell at 4 p.m. EDT, and the Big Board was scheduled to open as usual today, spokesman Ray Pellecchia said.

One huge user of electricity, aluminum giant Alcoa Inc., had no initial reports of problems at its 350 plants in North America, said spokesman Kevin Lowery in Pittsburgh. But he cautioned: "It's very early."

Whether the blackout swells beyond a temporary headache and actually dents the economy depends on how quickly it ends, said Gary Schlossberg, senior economist at Wells Capital Management in San Francisco.

"I would think the timing is relatively good, in that you're going into a weekend with one day" in the work week left, he said. "We could have a volatile [stock] market perhaps for a day or so," but otherwise "I don't see it having a ripple effect."

For certain sectors, the effect was immediate.

Flights were grounded at the New York area's three major airports, and at airports in Cleveland, Detroit, Rochester and several other cities. The delays were expected to impact Los Angeles International Airport. At least one United Airlines flight bound for New York, scheduled to leave about 4 p.m. PDT, was canceled, said United spokesman Stephan Roth. Transcontinental flights that usually leave New York around 6 p.m. EDT and arrive at LAX in the evening -- typically carrying 200 or more passengers each -- were grounded. LAX officials also were expecting "red-eye" flights departing Los Angeles for New York on Thursday night to be canceled if the blackout endured.

UAL Corp.'s United and AMR Corp.'s American Airlines said they would waive their usual change-of-flight fees for travelers affected by the power outage. They are among the main airlines serving the Los Angeles-New York route.

Passengers were not the only ones stuck. Drivers for United Parcel Service Inc. could not deliver or pick up parcels in New York and the other affected cities, and UPS planes could not leave the company's main New York-area airport, which is in Newark, N.J.

"Our operations in those cities are going to be very badly disrupted tonight," UPS spokesman Norman Black said.

"I can't put a number on it or say how many packages are involved," he said, but UPS also was grappling with the loss of electricity at its major sorting centers in New York and other affected cities. UPS moves about 12 million parcels each day nationwide.

Most major Wall Street firms said contingency plans were working well and emergency power generators were running smoothly. The Bond Market Assn., which represents bond traders, recommended that trading resume as usual today.

There was some uncertainty among traders about whether the outage would disrupt the settlement of Thursday's trades. And Fidelity Investments, the Boston-based mutual fund company, said it halted after-hours trading because its electronic network couldn't process orders.

"Overall, people are just trying to figure out what to do if this power doesn't get restored very quickly, and we're just trying to figure out what's going to happen" today, said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access.

U.S. Treasury futures prices jumped after initial word of the blackout sent investors fleeing to the safety of government debt.

But they quickly retreated as investors' fears concerning the possibility of another terrorist attack were allayed.

Starbucks Corp., meanwhile, closed its 150 stores in the New York City area and dozens more in other cities in the region, mainly so that its employees "would have the ability to get home at a reasonable time," said spokeswoman Audrey Lincoff.


Times wire services contributed to this report.

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