Airbus Loan Possible for Two Carriers
· America West and US Airways, now in merger talks, are said to be near a $250-million financing deal with the European aircraft maker.
From Associated Press
NEW YORK — As they discuss a possible merger, US Airways and America West are near a deal for a $250-million loan from Airbus as part of a 20-jet order for the aircraft maker's new A350 model, according to a newspaper report.
The loan would be part of a financing package the carriers are working to arrange with private investors for as much as $400 million, including $100 million to $150 million from ACE Aviation Holdings Inc., the parent of Air Canada, the Wall Street Journal reported Sunday on its website, citing people close to the situation.
US Airways Group Inc. and America West Holdings Corp. acknowledged last month that they were in merger talks. Reports have said a deal could be announced as soon as this week.
The companies want to raise $500 million in new equity, with $375 million to $400 million from investment and the rest from proceeds from a rights offering that would be underwritten by a major financial institution, the newspaper's sources said. The financing includes $125 million from Air Wisconsin Airlines Corp. that was announced in February.
A spokesman for America West, based in Tempe, Ariz., declined to comment Sunday on the report.
"We'll be happy to go into details when we're able to confirm that we're either planning to move forward or if something has fallen through. Until that resolution happens, we're not able to officially comment," America West spokesman Carlo Bertolini said.
US Airways did not immediately return a call seeking comment.
A spokeswoman for Montreal-based Air Canada, which left Bankruptcy Court protection last year, told the newspaper that the company didn't comment on rumors.
Wexford Capital, a hedge fund that had agreed two months ago to invest $125 million when US Airways leaves bankruptcy protection, isn't expected to complete that investment because other investors have offered more attractive terms, the newspaper said, citing a person familiar with the matter. But Wexford could still invest a smaller amount.
Boston-based hedge fund PAR Capital Management Inc. and a second hedge fund that also has invested in America West together are in advanced negotiations to provide $125 million of equity, the newspaper reported.
Besides a $250-million loan, Airbus would renegotiate prices and delivery dates for 63 planes the two airlines have on firm order with it, the Journal reported.
The merged airline also may agree to buy about 20 A350 jets for delivery soon after the new airplane starts flying in 2010-2011, marking the first orders for the jet from a North American customer, the newspaper said. Airbus, owned by European Aeronautic Defense & Space Co. and Britain's BAE Systems, is seeking launch orders for 50 airplanes by next month.
Airbus conceived the A350 in response to Boeing Co.'s new 787, which has attracted airline demand because of its lower operating costs. The 787, under development, is expected to begin commercial service in 2008.
US Airways, based in Arlington, Va., has been in Chapter 11 bankruptcy protection since September 2004. It was the second such filing in two years for the nation's seventh-largest carrier.
· America West and US Airways, now in merger talks, are said to be near a $250-million financing deal with the European aircraft maker.
From Associated Press
NEW YORK — As they discuss a possible merger, US Airways and America West are near a deal for a $250-million loan from Airbus as part of a 20-jet order for the aircraft maker's new A350 model, according to a newspaper report.
The loan would be part of a financing package the carriers are working to arrange with private investors for as much as $400 million, including $100 million to $150 million from ACE Aviation Holdings Inc., the parent of Air Canada, the Wall Street Journal reported Sunday on its website, citing people close to the situation.
US Airways Group Inc. and America West Holdings Corp. acknowledged last month that they were in merger talks. Reports have said a deal could be announced as soon as this week.
The companies want to raise $500 million in new equity, with $375 million to $400 million from investment and the rest from proceeds from a rights offering that would be underwritten by a major financial institution, the newspaper's sources said. The financing includes $125 million from Air Wisconsin Airlines Corp. that was announced in February.
A spokesman for America West, based in Tempe, Ariz., declined to comment Sunday on the report.
"We'll be happy to go into details when we're able to confirm that we're either planning to move forward or if something has fallen through. Until that resolution happens, we're not able to officially comment," America West spokesman Carlo Bertolini said.
US Airways did not immediately return a call seeking comment.
A spokeswoman for Montreal-based Air Canada, which left Bankruptcy Court protection last year, told the newspaper that the company didn't comment on rumors.
Wexford Capital, a hedge fund that had agreed two months ago to invest $125 million when US Airways leaves bankruptcy protection, isn't expected to complete that investment because other investors have offered more attractive terms, the newspaper said, citing a person familiar with the matter. But Wexford could still invest a smaller amount.
Boston-based hedge fund PAR Capital Management Inc. and a second hedge fund that also has invested in America West together are in advanced negotiations to provide $125 million of equity, the newspaper reported.
Besides a $250-million loan, Airbus would renegotiate prices and delivery dates for 63 planes the two airlines have on firm order with it, the Journal reported.
The merged airline also may agree to buy about 20 A350 jets for delivery soon after the new airplane starts flying in 2010-2011, marking the first orders for the jet from a North American customer, the newspaper said. Airbus, owned by European Aeronautic Defense & Space Co. and Britain's BAE Systems, is seeking launch orders for 50 airplanes by next month.
Airbus conceived the A350 in response to Boeing Co.'s new 787, which has attracted airline demand because of its lower operating costs. The 787, under development, is expected to begin commercial service in 2008.
US Airways, based in Arlington, Va., has been in Chapter 11 bankruptcy protection since September 2004. It was the second such filing in two years for the nation's seventh-largest carrier.
