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National Processing Ultimatum For U.S. Air: Bankruptcy deadline, chargeback burden leave few alternatives.

Publication: American Banker
Publication Date: 26-FEB-03 		Format: Online
Delivery: Immediate Online Access

Article Excerpt
When National Processing Inc. decided last year that it would not renew its airline credit card processing contracts as they expired, it cited the deteriorating financial situation across the travel sector.

But even before it could unwind all those relationships, two of its airline customers, U.S. Airways Group Inc. and United Airlines Inc., declared bankruptcy and that has the Louisville company facing a new problem: the possibility that it could be responsible for fronting hundreds of millions of dollars of refunds.

The situation has National Processing in a tricky spot and in the case of U.S. Airways, the National City Corp. unit has given the company a deadline to emerge from bankruptcy or risk losing processing services. That, in turn, would almost certainly put U.S. Airways out of business for good, executives at the airline have said.

According to testimony given by U.S. Airways chief executive David N. Siegel in January and by chief...

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