MAJOR PAPERS:

• The Wall Street Journal's "Heard on the Street" reported that VCG Special Opportunities Master Fund, a $58M asset hedge fund which is owned by an investment firm that also owns a Puerto Rican investment bank, is separately suing Citigroup Incorporated (NYSE: C) and Wachovia Corporation (NYSE: WB) for requiring it to pay money from "credit default swaps" as the value of mortgage backed bonds fell.

• In an attempt to cut back its growth plans due to higher fuel costs, AirTran Holdings Inc (NYSE: AAI) CEO Bob Fornaro said the Orlando-based airline will sell two jets next month. The Orlando Sentinel reported that record fuel costs could also impact AirTran's negotiations with its pilots union.
• Fnac is in talks with Apple Inc (NASDAQ: AAPL) to sell the iPhone in France, Le Figaro reported. The head of PPR SA's Fnac Chain, Denis Olivennes, said France Telecom's (NYSE: FTE) exclusivity rights for the iPhone in France are "inadmissible."

• Bloomberg reported that the head of Dubai International Capital, Sameer al-Ansari, said that as losses increase from the subprime mortgage market turmoil, Citigroup may need additional capital from outside investors.

Citigroup (NYSE: C) may need more cash. The head of Dubai International Capital told Reuters that it would take "a lot more money" to rescue Citigroup following investments from Abu Dhabi, Kuwait and Saudi Arabia's Prince Alwaleed.

The statement has the benefit of probably being true. Citi is almost certainly faced with more subprime losses and its derivative holdings of credit cards and munis plus LBO paper could lead the bank to have to write-off billions more in losses from these.

The question is where will the big bank go. Sovereign funds may not have an appetite for putting up more capital. US private equity firms may find the deal too risky. Things may get bad enough that the Fed will have to step in and give Citi a huge loan to keep its balance sheet solid enough for the bank to remain solvent.

The "a lot more money" may come from taxpayers.

Douglas A. McIntyre is an editor at 247wallst.com