Article from Terry Reed contributer 8/17/2012
Analyst: Could AMR Acquire US Airways in Bankruptcy?
A veteran airline analyst says the scenario for a US Airway/American Airlines merger could develop in an unanticipated way, with bankrupt American making a tender offer for its rival during its reorganization.
While speculation has focused largely on an acquisition by US Airways, Imperial Capital analyst Bob McAdoo maintains that an acquisition by AMR is “a clear possibility that should not be overlooked.
The cash needed to do a deal is readily available, McAdoo said, because American has $5.5 billion and US Airways has $2.5 billion. Additionally, International Airlines Group, the holding company for British Airways, has said it could invest in a deal that keeps AMR in the Oneworld alliance and adds US Airways as well. McAdoo said more than $8.3 billion could be available.
I think this point is lost on most people here.
The combined entity would have slightly more cash than UAL and waaaaayyy more than DAL.
Makes for a very interesting scenario.
In any case, the question of who would run the new American is an intriguing one.
It seems clear that AMR CEO Tom Horton wants to retain control. “AMR’s wariness towards US Airways has more to do with who is controlling the combined entity than disagreement on the merits of merging in the first place,” McAdoo wrote. Given that American is twice the size of US Airways, Horton has a strong case to make.
On the other hand, since 2004, CEO Doug Parker’s management team, then working together at America West, has pursued mergers. It succeeded with US Airways, then failed with Delta and United. In every case, the intent has been that Parker and the team would run the merged airline.
“US Airways’ management team has already demonstrated the ability to execute a successful merger followed by a turnaround,” McAdoo wrote. Also, American’s 50,000 unionized employees have made it clear that they prefer Parker. All three of the carrier’s biggest unions have signed tentative contracts with US Airways, but continue to battle over contract deals with American...................
The daily drama is compelling, but McAdoo says it should not detract investors from a focus on the ultimate outcome, which is likely to be a merger that would benefit both carriers, giving American an East Coast presence while US Airways gains international heft. McAdoo thinks US Airways would benefit in any scenario, and has a target price of $19 on the shares, which traded at $10.5 shortly after noon on Friday.
Analyst: Could AMR Acquire US Airways in Bankruptcy?
A veteran airline analyst says the scenario for a US Airway/American Airlines merger could develop in an unanticipated way, with bankrupt American making a tender offer for its rival during its reorganization.
While speculation has focused largely on an acquisition by US Airways, Imperial Capital analyst Bob McAdoo maintains that an acquisition by AMR is “a clear possibility that should not be overlooked.
The cash needed to do a deal is readily available, McAdoo said, because American has $5.5 billion and US Airways has $2.5 billion. Additionally, International Airlines Group, the holding company for British Airways, has said it could invest in a deal that keeps AMR in the Oneworld alliance and adds US Airways as well. McAdoo said more than $8.3 billion could be available.
I think this point is lost on most people here.
The combined entity would have slightly more cash than UAL and waaaaayyy more than DAL.
Makes for a very interesting scenario.
In any case, the question of who would run the new American is an intriguing one.
It seems clear that AMR CEO Tom Horton wants to retain control. “AMR’s wariness towards US Airways has more to do with who is controlling the combined entity than disagreement on the merits of merging in the first place,” McAdoo wrote. Given that American is twice the size of US Airways, Horton has a strong case to make.
On the other hand, since 2004, CEO Doug Parker’s management team, then working together at America West, has pursued mergers. It succeeded with US Airways, then failed with Delta and United. In every case, the intent has been that Parker and the team would run the merged airline.
“US Airways’ management team has already demonstrated the ability to execute a successful merger followed by a turnaround,” McAdoo wrote. Also, American’s 50,000 unionized employees have made it clear that they prefer Parker. All three of the carrier’s biggest unions have signed tentative contracts with US Airways, but continue to battle over contract deals with American...................
The daily drama is compelling, but McAdoo says it should not detract investors from a focus on the ultimate outcome, which is likely to be a merger that would benefit both carriers, giving American an East Coast presence while US Airways gains international heft. McAdoo thinks US Airways would benefit in any scenario, and has a target price of $19 on the shares, which traded at $10.5 shortly after noon on Friday.