US Airways: Collapse of America West plan ?not really an option’
US Airways Group Inc. and America West Holdings Corp. may announce a merger agreement this week, US Airways Chairman David Bronner said yesterday.
Talks between US Airways, the seventh-largest U.S. airline, and No. 8 America West Airlines have progressed to the point that a collapse of the planned merger “is not really an option,” Mr. Bronner said in Montgomery, Ala., where he serves as chief executive officer of Retirement Systems of Alabama.
Negotiations have involved Airbus SAS, Air Canada parent ACE Aviation Holdings Inc. and hedge fund Par Capital Management Inc., which would provide funds to support the deal, sources familiar with the talks have said. The combination would give US Airways, based in Arlington, the funding it needs to emerge from bankruptcy protection and allow America West to conserve cash for a potential liquidity crunch later this year.
The merger “hasn’t been approved by enough people to do it [today],” Mr. Bronner said. “I think you’ll have some kind of announcement, one way or another, by the end of this week, or if not, by early next week.”
America West Chief Executive Officer W. Douglas Parker yesterday said he is “hopeful” a decision on whether to merge with US Airways will be made “in the near future.”
Elise Eberwein, a spokeswoman for the Phoenix carrier, and Amy Kudwa, a spokeswoman for US Airways, declined to comment on Mr. Bronner’s remarks. The talks have “a bunch of moving pieces” and it has been “very difficult” to get all the parties to agree, Mr. Bronner said.
General Electric Co., Boeing Co. and the U.S. Air Transportation Stabilization Board have been involved in negotiations on a deal, Mr. Bronner said. He declined to be more specific on their roles. GE and the ATSB are creditors of US Airways, with GE the largest. Boeing Capital Corp., which leases aircraft, is not a creditor, A Boeing spokeswoman said.
Retirement Systems of Alabama is the largest shareholder in US Airways. It paid $240 million for a 40 percent stake in the airline, provided $500 million in bankruptcy financing and renegotiated about $340 million in bond debt related to US Airways planes to bring the carrier out of its first bankruptcy in March 2003. The airline filed Chapter 11 for the second time in September.
A merger would create the sixth-largest U.S. airline, based on miles flown by paying passengers, with a route system spanning the United States. It would surpass Southwest Airlines Co., currently No. 6 in the United States and the world’s largest low-fare carrier.
“With America West, you have East Coast-West Coast flying that US Airways is not doing a very good job with,” Mr. Bronner said. “It makes a lot of money going North-South” primarily along the East Coast.
An agreement must be approved by U.S. antitrust regulators and the ATSB, which provided federal loan guarantees for both US Airways and America West after the September 11, 2001, terrorist attacks. Creditors for US Airways, the bankruptcy court and the unions and shareholders of both airlines also would have to approve an agreement.