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America West Airlines Remains the Only Bidder for US Airways As Deadline Passes

Posted on: Wednesday, 6 July 2005, 00:00 CDT

Jul. 2--America West Airlines won't see any rivals for ailing US Airways.

A federal bankruptcy court deadline came and went Friday, and no other bidders emerged for the Arlington, Va.-based carrier or its assets.

With no competing bids submitted, America West said it cleared the next step in its plan to merge.

"We've always been confident that our plan to merge with US Airways is in the best interest of both airlines' stakeholders and believe we remain on track for a close date this fall," said Phil Gee, airline spokesman.

US Airways issued a statement saying the merger proposal was comprehensive and built on a robust business plan and strong balance sheet.

"It would have been difficult for other offers to have provided comparable valuable to our stakeholders, and with this bidding process now behind us, we will begin planning with America West for the integration of our two companies," said US Airways President and CEO Bruce Lakefield.

Some industry watchers thought America West arch-rival Southwest Airlines might make a late play for some of US Airways assets, especially gates at Philadelphia International Airport. But in the end, the carrier decided against a bid because simply going after the gates wouldn't have been enough to trump the merger deal, a Southwest spokeswoman said.

The fact there were no other suitors was no surprise to Michael Boyd of the Colorado-based Boyd Group, an airline consulting and planning company.

"There's not much to bid on that makes sense for other carriers," he said. "If Southwest wants to zap the deal, they'll go into Charlotte and they don't need a judge for that."

US Airways has a hub in Charlotte, N.C., and Boyd says anyone trying to doom its merger with America West will take a stand at that airport.

"Charlotte is the linchpin," Boyd said. "No Charlotte, no linchpin."

U.S. Bankruptcy Judge Stephen Mitchell will review the America West-US Airways proposal Thursday. A US Airways reorganization plan filed this week also needs the approval of Mitchell and the airline's creditors.

The federal Air Transportation Stabilization Board, which guaranteed $1 billion in loans for the airlines following the terrorist attacks of Sept. 11, 2001, still has to buy off on the pact. America West shareholders and Department of Transportation also need to OK the deal.

The two airlines say they will create a national low-fare carrier that will be profitable even if oil remains at $50 or $60 a barrel. The two airlines have been able to attract $500 million in new investments, and the airlines say when the merger closes in September or October the combined carrier will have $2 billion in cash.

Creditors of US Airways will receive either 10 percent of the money owed them or stock in the new airline under a reorganization plan filed in court this week.

US Airways Group Inc., the carrier's parent, filed for bankruptcy protection in September, its second trip into Chapter 11 since 2002.

According to the plan of reorganization, unsecured creditors with claims of less than $50,000 would receive 10 percent of their claim, up to $5,000.

That's an improvement from US Airways' first trip into bankruptcy, when unsecured creditors received 2 cents on the dollar for their claims.

Unsecured creditors with claims larger than $50,000 will receive stock in the merged company under the plan. The exact value of the stock is unclear and depends in part on what creditor claims will be allowed.

The largest unsecured creditor is the federal Pension Benefit Guaranty Corp., which took over the airline's underfunded pension plans. The PBGC has estimated that it will cost $2.3 billion to administer the plans that were terminated in this bankruptcy.

Meanwhile, America West said Friday revenue passenger miles for June were a record 2.2 billion, an increase of 4.1 percent from June 2004. Capacity for June 2005 was a record 2.6 billion available seat miles, up 0.2 percent from June 2004. The passenger load factor, or the percentage of a plane filled with passengers, was a record at 83.6 percent versus 80.5 percent in June 2004.

For the second quarter, America West reported record revenue passenger miles of 6.4 billion, an increase of 8 percent over the second quarter of 2004. The carrier also said it had record year-to-date revenue passenger miles of 12.1 billion.

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AWA, UAIRQ, LUV,

Source: The Tribune

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