Southwest Mulling Bid

[CaptBud330]

Southwest Airlines mulls bid for US Airways Group assets
Southwest Airlines Inc. says it is considering bidding for some assets of US Airways Group Inc., which is slated to merge with America West Holdings Corp.

The combination US Airways and America West will create the sixth-largest airline in the United States, forming a carrier that will rival Dallas-based Southwest (NYSE:LUV) in size, with a wide choice of routes.

"We're going to keep all of our options at this point," Reuters quotes Southwest Chief Executive Gary Kelly as saying during a presentation to analysts at a conference sponsored by Merrill Lynch & Co. "I wouldn't discount the thought of making a bid."

However, he said Southwest's interest would be in some of US Airways' gates -- in particular at the Philadelphia airport, where Southwest is having trouble finding space to expand -- rather than the whole airline.

US Airways, which is operating under Chapter 11 bankruptcy protection, operates 34 gates at Charlotte/Douglas International Airport, its largest and most profitable hub.

The Retirement Systems of Alabama owns a major interest in US Airways Group, and RSA's chief executive, David Bronner, is chairman of the bankrupt airline. Although RSA does not own a majority of US Airways' shares, its holdings represent a majority of the voting shares.

In late May, a bankruptcy judge granted US Airways request for a 30-day window allowing other parties to make bids to supplant its proposed merger with America West Holding Corp.

US Airways sought the window to "shake the tree and see if there's any higher, better offer."

If no other suitors emerge, the two air carriers would exclusively negotiate a merger.

Virginia-based US Airways and America West announced their plan to merge May 20.

 

[madders]

operative word here is bidding for some of Usairways assets,
therefore the deal will have to be better than the merger deal
for the judge to approve it

So how much money is Southwest willing to spend to get rid of competition

 

[gso-crew]

This has been predicted on the board before. Southwest will get their gates, for a price, in PHL. The new US/HP to compete with WN in PHL, like they do in LAS and PHX. I see major changes coming to PHL. In fact I see major changes coming to the entire east coast.

 

[Bud8EE]

This has been predicted on the board before. Southwest will get their gates, for a price, in PHL. The new US/HP to compete with WN in PHL, like they do in LAS and PHX. I see major changes coming to PHL. In fact I see major changes coming to the entire east coast.

[post="276103"][/post]​

ALA AA/TWA where CAL and others bid for specific assetts the Judge felt the AA offer for the entirety was a better deal for creditors and employees. It's an either or option. IFf the AWA/US merger agreement is for the entirety of US assets being merger minus carveouts targeted like Crystal City. etc. he either approves the merger or the LUV bids and others. It's not some of this bid and some of that if the principal components of competeng bids/POR conflict.

 

[gso-crew]

I think he will approve the merger and then Parker makes a deal with the highest bider.

 

[avek00]

ALA AA/TWA where CAL and others bid for specific assetts the Judge felt the AA offer for the entirety was a better deal for creditors and employees. It's an either or option. IFf the AWA/US merger agreement is for the entirety of US assets being merger minus carveouts targeted like Crystal City. etc. he either approves the merger or the LUV bids and others. It's not some of this bid and some of that if the principal components of competeng bids/POR conflict.

[post="276104"][/post]​

Not necessarily.

If WN or someone else makes an offer for some gates, etc. that US would be foolish to turn down, there is the possibility of a 3-way deal emerging. Remember that US' last merger attempt had some assets going to AA.

 

[JayBrian]

If US wants to give up some gates they should work out a sale/trade. Move AC/HP/UA closer and let WN have those vacated gates.

 

[bwipilot]

Well this is a nice little tactic. SWA bids and muddies the water, possibly delaying the merger to the point where it falls apart and causes US to liquidate. that's their best case. Worst case is that the bid is rejected and SWA loses very little cash.

Nice move on their part.

[post="276074"][/post]​

I strongly doubt SWA wants US Airways to go Ch 7. SWA would like to buy gates at PHL so it can grow. It would also like US to shrink which will happen as part of the HP merger. An outright Ch 7 would allow all the other airlines to fill in before SWA can get enough airplanes and train enough employees to take advantage of the opportunity. Hence, stating SWA is bidding in hopes of making US liquidate is overblown. Taking a chunk from US is exactly what SWA wants--but will be very hard to get from the bankruptcy court since HP and the investors would scream because it would reduce the value of PHL greatly.

 

[a320av8r]

SWA?
Phuque 'em. :down:

 

[USA320Pilot]

JayBrian:

JayBrian said: "If US wants to give up some gates they should work out a sale/trade. Move AC/HP/UA closer and let WN have those vacated gates."

USA320Pilot comments" Your comment makes sense and could be Kelly's motivation, since Southwest has two gates on "D" concourse. Your idea would help consolidate the new US Airways, United, and Air Canada North American Star Alliance operations and provide Southwest some PHL gates, which seems to be their target from every news media article I have seen discussing Southwest's interest in US Airways assets.

Regards,

USA320Pilot

 

[usairways85]

If i am correct AA was not receiving any assets in the US/UA deal. A new airline was going to be created named DC Air, they were supposed to get some assets namely the DCA operation.

WN is one of the few airlines actually receiving aircraft and quite a few of them in the next year or two. If anyone is ready to fill the void quickly in PHL it is WN, not any other carrier.

 

[avek00]

UA has to agree to losing $300 million in annual codeshare revenue before HP's network effectively enters Star Alliance.

 

[700UW]

PHL is US Airways' #1 money making city, I doubt you will see US/HP give up any gates in PHL for WN to take them on even more.

 

[usairways85]

Not only what 700UW said, but if you are familiar with the gate situation in PHL it is not that easy to just switch a few gates and all of a sudden US/HP/UA/AC are all in the same terminals. With the current number of flts each airline has and the number of gates they have i dont see all the airlines consolidated in the same terminals at PHL for a while.

 

[USA320Pilot]

According to Business Travel News, "The renewed US Airways also would maintain domestic United Airlines and worldwide Star Alliance affiliations, becoming the only current domestic LCC to participate in a global airline alliance."

See Story

US Airways executive vice president of marketing and planning Bruce Ashby returned from the Star Alliance meeting on Thursday, June 2. Ashby briefed Star Alliance member's on the proposed America West merger, his perspective as US Airways' merger integration team leader, and how the new US Airways would evolve.

According to Aviation Daily, "Everyone has expressed strong support for the deal," Ashby said. While both airlines hesitate to put firm deadlines or discuss timelines of emergence and finalizing the merger, Ashby recently told The DAILY in Japan after a Star Alliance meeting that he is shooting for a September approval of the reorganization plan and exit from bankruptcy. Once US Airways emerges, "there’s a lot more work to be done," in terms of the integration plan with America West, he said.

Regards,

USA320Pilot