US Airways, AmWest deal?
Dawn Gilbertson
The Arizona Republic
Apr. 9, 2005 12:00 AM
[font=arial,helvetica,sans-serif]America West Airlines CEO Doug Parker has repeatedly said the Tempe airline wants to be a player in the expected consolidation of the troubled industry.
One industry analyst said Friday that America West may have bankrupt US Airways in its sights.
JP Morgan airline analyst Jamie Baker said in a report that there is "early speculation" on a proposed America West/US Airways "linkage." He provided no details. advertisement
OAS_AD('BoxAd')
This is not the first time America West's name has come up as a possible partner for the struggling East Coast carrier, but Baker's wording and the fact that he included the speculation in his report seem to suggest it's more than just idle chatter.
America West spokeswoman Elise Eberwein reiterated Parker's comments that a shakeout is inevitable for the industry's long-term survival. But she said that at this point any talk of an America West deal with US Airways is "only speculation," and that the company does not comment on speculation. US Airways did not return calls for comment.
America West made a run at another struggling airline, ATA Airlines, late last year but decided against making a formal bid for the because it couldn't put together a deal that made financial sense. A big obstacle was the cost of acquiring the Indianapolis carrier's planes. ATA ended up in a deal with Southwest.
At the time of the America West-ATA talks, one analyst who was opposed to that deal said a merger with US Airways would make more sense.
A key attraction, observers say, is the marriage of America West's West Coast-heavy operations and US Airways' East Coast emphasis.
Given the industry's fuel price and airfare woes, however, most see more challenges than benefits to any significant deal at this stage.
The most immediate obstacle is money. America West and most other airlines are losing millions right now and need every penny for their operations. In the same report, Baker says America West will face a crash crunch by the end of the year. He said America West, which ended 2004 with unrestricted cash and investments of $306 million, could be down to as low as the $60 million range. It needs to raise a minimum of about $100 million, but Baker added it should be able to do that.
Robert Mann, an airline industry consultant in Port Washington, N.Y., said the economics don't seem right at this point. If anything, a code-sharing deal would seem to make more sense. Under code sharing, airlines link their networks and feed each other passengers. It enables them to increase their business without the added costs of new cities or the hefty expenses of a merger.
Another possible player in any deal could be Phoenix-based Mesa Air Group and its chairman, Jonathan Ornstein. Mesa is best known locally as America West Express, but it also flies as US Airways Express.
In the wake of recent large investments in US Airways by two of its other commuter partners, Mesa has said it is considering an investment in the airline. Mesa has about $300 million in cash.
Despite analyst reports this week suggesting Mesa is no longer a player on that front because of developments involving the other players, Ornstein said Friday the company still is considering ways to help US Airways return to profitability.[/font]
if(ScriptsLoaded) stInit();
