CaptainChris
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- 29/07/2003
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The New York Times, The Associated Press, Reuters
Thursday, April 21, 2005
US Airways, which is operating under bankruptcy court protection, has said it was in advanced discussions to merge with America West, a low-fare airline. The combination would create the sixth-largest U.S. airline, supplanting Southwest.
.
The talks come amid widespread calls for consolidation in the industry to lead airlines out of billions of dollars in losses.
.
"A lot of things will happen in the U.S. airline industry in the next 12 to 18 months," David Bronner, the chairman of US Airways, told The Associated Press late Tuesday. "We'll do whatever we need to survive."
.
Amid the merger talks, America West on Wednesday said it swung to a profit in its latest quarter. Net income totaled $33.6 million for the January-March period against a loss of $1.6 million a year earlier. Operating revenue increased 11.3 percent to $722.6 million.
.
The America West chief executive, W.Douglas Parker, has been a strong proponent of the need for consolidation within the industry. In February, Parker said that he expected a wave of mergers to sweep U.S. low-cost carriers and that he saw America West participating.
.
Other chief executives, including Glenn Tilton at United Airlines and Gary Kelly at Southwest Airlines, have argued that the industry is awash in too many seats, driving down prices as airlines are struggling with high costs and stiff competition.
.
US Airways has been viewed by many analysts as ripe for a takeover once it emerges from bankruptcy.
.
US Airways, which is based in Arlington, Virginia, is the seventh-largest airline in the United States, and America West, based in Phoenix, Arizona, is eighth. US Airways has discussed a merger with several rival carriers, but negotiations with America West have progressed the furthest.
.
Talks "probably started in earnest a few months ago," but no deal is imminent, said Bronner, who also serves as chief of the Retirement Systems of Alabama, which invested $240 million in US Airways.
.
America West declined to comment on the discussions.
.
Others close to the talks characterized them as serious and said that a conclusion could be reached within a few weeks.
.
"Strategically, on the map, the two are a very logical fit," said Ray Neidl, an analyst with Calyon Securities.
.
But he said a merger would be "a can of worms" in the short term because of the complications of integrating the two companies' work forces and fleets.
.
Any agreement would face several hurdles. For one, it would need the approval of the U.S. Bankruptcy Court in Alexandria, Virginia. Last September, US Airways filed for its second round of court protection in two years.
.
US Airways also would need the support of its creditors. And under the provisions of the bankruptcy reorganization, a competing bidder could enter the picture with a higher offer, either for US Airways or for its assets. Further, the two airlines collectively owe more than $1 billion on packages of federally backed loans, so U.S. government approval also would be necessary.
.
The two airlines have different types of operations. Although it has used low-fare airlines as a model for cutting its costs, US Airways is a traditional hub-and-spoke carrier, serving a variety of cities large and small, primarily on the U.S. East Coast. It has hubs in Philadelphia and in Charlotte, North Carolina, as well as significant operations in Pittsburgh and in Fort Lauderdale, Florida, and an East Coast shuttle connecting New York to Boston and Washington.
.
While America West has hubs in Phoenix and Las Vegas, it also offers a variety of the kind of direct flights that are favored by low-fare airlines.
.
According to people close to the discussions, America West executives met in Washington on Friday with staff members and advisers to the Air Transportation Stabilization Board, which oversees the loan guarantees of the two airlines. US Airways owes $717 million on its package, and America West owes about $300 million.
.
The talks call into question whether US Airways would continue to seek investors so that it could emerge from bankruptcy as an independent carrier. In recent weeks, two regional airlines, Air Wisconsin and Republic Airlines, have reached agreements with US Airways on investments totaling $250 million. US Airways had said it needed about $350 million to emerge from bankruptcy.
.
Industry analysts said it would be difficult to put a value on a combined US Airways and America West. Nonetheless, an agreement would be a coup for Parker, who is the only chief executive among those of the eight biggest U.S. airlines who was in place since before the terrorist attacks of September 2001.
Thursday, April 21, 2005
US Airways, which is operating under bankruptcy court protection, has said it was in advanced discussions to merge with America West, a low-fare airline. The combination would create the sixth-largest U.S. airline, supplanting Southwest.
.
The talks come amid widespread calls for consolidation in the industry to lead airlines out of billions of dollars in losses.
.
"A lot of things will happen in the U.S. airline industry in the next 12 to 18 months," David Bronner, the chairman of US Airways, told The Associated Press late Tuesday. "We'll do whatever we need to survive."
.
Amid the merger talks, America West on Wednesday said it swung to a profit in its latest quarter. Net income totaled $33.6 million for the January-March period against a loss of $1.6 million a year earlier. Operating revenue increased 11.3 percent to $722.6 million.
.
The America West chief executive, W.Douglas Parker, has been a strong proponent of the need for consolidation within the industry. In February, Parker said that he expected a wave of mergers to sweep U.S. low-cost carriers and that he saw America West participating.
.
Other chief executives, including Glenn Tilton at United Airlines and Gary Kelly at Southwest Airlines, have argued that the industry is awash in too many seats, driving down prices as airlines are struggling with high costs and stiff competition.
.
US Airways has been viewed by many analysts as ripe for a takeover once it emerges from bankruptcy.
.
US Airways, which is based in Arlington, Virginia, is the seventh-largest airline in the United States, and America West, based in Phoenix, Arizona, is eighth. US Airways has discussed a merger with several rival carriers, but negotiations with America West have progressed the furthest.
.
Talks "probably started in earnest a few months ago," but no deal is imminent, said Bronner, who also serves as chief of the Retirement Systems of Alabama, which invested $240 million in US Airways.
.
America West declined to comment on the discussions.
.
Others close to the talks characterized them as serious and said that a conclusion could be reached within a few weeks.
.
"Strategically, on the map, the two are a very logical fit," said Ray Neidl, an analyst with Calyon Securities.
.
But he said a merger would be "a can of worms" in the short term because of the complications of integrating the two companies' work forces and fleets.
.
Any agreement would face several hurdles. For one, it would need the approval of the U.S. Bankruptcy Court in Alexandria, Virginia. Last September, US Airways filed for its second round of court protection in two years.
.
US Airways also would need the support of its creditors. And under the provisions of the bankruptcy reorganization, a competing bidder could enter the picture with a higher offer, either for US Airways or for its assets. Further, the two airlines collectively owe more than $1 billion on packages of federally backed loans, so U.S. government approval also would be necessary.
.
The two airlines have different types of operations. Although it has used low-fare airlines as a model for cutting its costs, US Airways is a traditional hub-and-spoke carrier, serving a variety of cities large and small, primarily on the U.S. East Coast. It has hubs in Philadelphia and in Charlotte, North Carolina, as well as significant operations in Pittsburgh and in Fort Lauderdale, Florida, and an East Coast shuttle connecting New York to Boston and Washington.
.
While America West has hubs in Phoenix and Las Vegas, it also offers a variety of the kind of direct flights that are favored by low-fare airlines.
.
According to people close to the discussions, America West executives met in Washington on Friday with staff members and advisers to the Air Transportation Stabilization Board, which oversees the loan guarantees of the two airlines. US Airways owes $717 million on its package, and America West owes about $300 million.
.
The talks call into question whether US Airways would continue to seek investors so that it could emerge from bankruptcy as an independent carrier. In recent weeks, two regional airlines, Air Wisconsin and Republic Airlines, have reached agreements with US Airways on investments totaling $250 million. US Airways had said it needed about $350 million to emerge from bankruptcy.
.
Industry analysts said it would be difficult to put a value on a combined US Airways and America West. Nonetheless, an agreement would be a coup for Parker, who is the only chief executive among those of the eight biggest U.S. airlines who was in place since before the terrorist attacks of September 2001.
