lowecur
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Arizona Republic says Thurs the day.
AmWest, US Air deal likely soon
Formal announcement of merger reportedly is set for Thursday
Dawn Gilbertson
The Arizona Republic
May. 16, 2005 12:00 AM
Weeks of speculation about an America West Airlines-US Airways merger should give way to straight facts this week, with a formal announcement of the deal tentatively set for Thursday.
Sources close to the talks say the airlines and the partners they have lined up to help create the nation's sixth-largest carrier are aiming to release the news after the stock market closes that day.
There are no guarantees they'll meet that goal, of course, given the myriad parties involved and mountains of paperwork. Previous internal deadlines have come and gone. America West has plenty on its plate early in the week, with its annual shareholders meeting and quarterly board of directors meeting in Tempe.
Whenever it comes - and few don't expect a deal at this point - the merger announcement may begin to answer a cargo-hold's worth of questions on the minds of employees, unions, travelers, airport officials and city leaders from Philadelphia to Phoenix. In the Valley, the airline has more than 10,000 employees and accounts for nearly 40 percent of the passenger traffic at Sky Harbor International Airport, 50 percent if you add in commuter operation America West Express. US Airways' big hubs are in Philadelphia and Charlotte, N.C.
Wall Street will be watching keenly, too, and has been skeptical of the marriage to date. America West's stock has fallen 15 percent since word of the talks leaked last month, closing at $4.09 Friday.
The big unknowns:
• Will the two airlines attempt to merge their workforces and route maps immediately or phase in the merger, and if so, how?
• How much will the combined airline shrink given the industry's woes and the ease of shedding aircraft in Bankruptcy Court? What will the resulting hit to employees be?
• When does the America West name go away, as expected?
• Will the headquarters be in Tempe, as industry sources have said is the plan?
• Will the new airline have enough cash to weather the industry's nasty near-term outlook?
At the same time, any agreement will raise a host of new questions: Will it receive the necessary approvals from the Bankruptcy Court, shareholders and the federal government, which loaned both carriers money after Sept. 11, 2001? Will competitors or other bidders step in with counteroffers or heavy-handed protests?
The unions representing the airlines' employees say they will immediately zero in on the people impact of any deal.
"That's going to be our Number 1 concern: what's the structure of the new corporation look like," said Bill McGlashen, president of the America West unit of the Association of Flight Attendants. "If there's any dramatic swings in operations that's definitely going to affect people, we're obviously going to be concerned about that."
Parties involved in the talks say the two airlines will shed at least 60 aircraft from the combined fleet, most likely Boeing 737s. Using only the flight crew of five, that alone could affect 300 workers.
At the end of the day, McGlashen said, the airline's 2,650 flight attendants "have to be protected," he said.
The airline last week froze all future flight attendant training, including canceling a class that was due to begin today.
On a hotline message to flight attendants Friday, McGlashen pledged to hold America West CEO Doug Parker accountable for his promise that no deal will compromise the hard work America West employees put in to turn around the airline.
"We cannot and will not be shortchanged by any merger or transaction," he said.
Representatives from America West's other unions are making similar vows, and they will no doubt turn up the volume after details emerge.
JR Baker, head of the America West unit of the Air Line Pilots Association, urged pilots in a hotline message Friday to be careful when taking the company's recent offer of a voluntary leave so as to not affect their longevity.
There is a lot of angst among union employees because of big disparities between America West and US Airways.
US Airways has been around for decades longer than America West, so it trumps the airline's workers in all-important seniority, is triple the size and has a route map with significant international tentacles.
At the same time, America West is the healthier of the two, is not in bankruptcy and has lower costs even after US Airways workers' deep pay concessions. America West's top executives are expected to run the combined show.
Wall Street will initially focus on the financial structure of the deal. When word of the talks first surfaced last month, there was widespread doubt about the airlines' ability to raise the $500 million-plus needed to pull off a deal given the industry's non-stop losses, the weak balance sheets of both airlines and the poor track record of airline mergers.
Those concerns now seem overblown, with several parties said to be on the verge of ponying up more than enough money. The lead equity investors to date, people close to the talks say, are PAR Capital Management, a longtime America West shareholder, Air Canada and Air Wisconsin, each for about $125 million. Air Wisconsin, a regional carrier that also signed a commuter flying deal with US Airways, is the only one to publicly confirm its participation.
Other big players include airline suppliers Airbus, which has planes at both carriers, and the aircraft leasing and jet engine arms of General Electric, US Airways' largest creditor.
Henri Courpron, Airbus North America CEO, said in Phoenix last month that the aircraft manufacturer is not in the banking business and would not look to be an investor in the deal. Still, he said, it was in contact with the two airlines and would consider helping out in ways related to aircraft orders.
"We've done it in the past, and we will do it in the future," he said.
The Wall Street Journal pegged Airbus' help at $250 million, in the form of a loan tied to an order for 20 of the company's new A350s, the competitor to Boeing's new 787 Dreamliner. The A350 isn't due to start commercial flights until at least 2010.
America West has reached similar deals with Airbus in the past. In 1990, Airbus gave it $220 million in cash, spare parts and flight training in exchange for an order for 118 A320s. It never took most of the planes because of its 1991 bankruptcy filing.
AmWest, US Air deal likely soon
Formal announcement of merger reportedly is set for Thursday
Dawn Gilbertson
The Arizona Republic
May. 16, 2005 12:00 AM
Weeks of speculation about an America West Airlines-US Airways merger should give way to straight facts this week, with a formal announcement of the deal tentatively set for Thursday.
Sources close to the talks say the airlines and the partners they have lined up to help create the nation's sixth-largest carrier are aiming to release the news after the stock market closes that day.
There are no guarantees they'll meet that goal, of course, given the myriad parties involved and mountains of paperwork. Previous internal deadlines have come and gone. America West has plenty on its plate early in the week, with its annual shareholders meeting and quarterly board of directors meeting in Tempe.
Whenever it comes - and few don't expect a deal at this point - the merger announcement may begin to answer a cargo-hold's worth of questions on the minds of employees, unions, travelers, airport officials and city leaders from Philadelphia to Phoenix. In the Valley, the airline has more than 10,000 employees and accounts for nearly 40 percent of the passenger traffic at Sky Harbor International Airport, 50 percent if you add in commuter operation America West Express. US Airways' big hubs are in Philadelphia and Charlotte, N.C.
Wall Street will be watching keenly, too, and has been skeptical of the marriage to date. America West's stock has fallen 15 percent since word of the talks leaked last month, closing at $4.09 Friday.
The big unknowns:
• Will the two airlines attempt to merge their workforces and route maps immediately or phase in the merger, and if so, how?
• How much will the combined airline shrink given the industry's woes and the ease of shedding aircraft in Bankruptcy Court? What will the resulting hit to employees be?
• When does the America West name go away, as expected?
• Will the headquarters be in Tempe, as industry sources have said is the plan?
• Will the new airline have enough cash to weather the industry's nasty near-term outlook?
At the same time, any agreement will raise a host of new questions: Will it receive the necessary approvals from the Bankruptcy Court, shareholders and the federal government, which loaned both carriers money after Sept. 11, 2001? Will competitors or other bidders step in with counteroffers or heavy-handed protests?
The unions representing the airlines' employees say they will immediately zero in on the people impact of any deal.
"That's going to be our Number 1 concern: what's the structure of the new corporation look like," said Bill McGlashen, president of the America West unit of the Association of Flight Attendants. "If there's any dramatic swings in operations that's definitely going to affect people, we're obviously going to be concerned about that."
Parties involved in the talks say the two airlines will shed at least 60 aircraft from the combined fleet, most likely Boeing 737s. Using only the flight crew of five, that alone could affect 300 workers.
At the end of the day, McGlashen said, the airline's 2,650 flight attendants "have to be protected," he said.
The airline last week froze all future flight attendant training, including canceling a class that was due to begin today.
On a hotline message to flight attendants Friday, McGlashen pledged to hold America West CEO Doug Parker accountable for his promise that no deal will compromise the hard work America West employees put in to turn around the airline.
"We cannot and will not be shortchanged by any merger or transaction," he said.
Representatives from America West's other unions are making similar vows, and they will no doubt turn up the volume after details emerge.
JR Baker, head of the America West unit of the Air Line Pilots Association, urged pilots in a hotline message Friday to be careful when taking the company's recent offer of a voluntary leave so as to not affect their longevity.
There is a lot of angst among union employees because of big disparities between America West and US Airways.
US Airways has been around for decades longer than America West, so it trumps the airline's workers in all-important seniority, is triple the size and has a route map with significant international tentacles.
At the same time, America West is the healthier of the two, is not in bankruptcy and has lower costs even after US Airways workers' deep pay concessions. America West's top executives are expected to run the combined show.
Wall Street will initially focus on the financial structure of the deal. When word of the talks first surfaced last month, there was widespread doubt about the airlines' ability to raise the $500 million-plus needed to pull off a deal given the industry's non-stop losses, the weak balance sheets of both airlines and the poor track record of airline mergers.
Those concerns now seem overblown, with several parties said to be on the verge of ponying up more than enough money. The lead equity investors to date, people close to the talks say, are PAR Capital Management, a longtime America West shareholder, Air Canada and Air Wisconsin, each for about $125 million. Air Wisconsin, a regional carrier that also signed a commuter flying deal with US Airways, is the only one to publicly confirm its participation.
Other big players include airline suppliers Airbus, which has planes at both carriers, and the aircraft leasing and jet engine arms of General Electric, US Airways' largest creditor.
Henri Courpron, Airbus North America CEO, said in Phoenix last month that the aircraft manufacturer is not in the banking business and would not look to be an investor in the deal. Still, he said, it was in contact with the two airlines and would consider helping out in ways related to aircraft orders.
"We've done it in the past, and we will do it in the future," he said.
The Wall Street Journal pegged Airbus' help at $250 million, in the form of a loan tied to an order for 20 of the company's new A350s, the competitor to Boeing's new 787 Dreamliner. The A350 isn't due to start commercial flights until at least 2010.
America West has reached similar deals with Airbus in the past. In 1990, Airbus gave it $220 million in cash, spare parts and flight training in exchange for an order for 118 A320s. It never took most of the planes because of its 1991 bankruptcy filing.
