US Airways Confirms It Has Hired M&A Advisors For Possible AMR Takeover
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autofixer
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This is going to suck!!! I wonder, from a pilot perspective, if both managements are looking out at the horizon and seeing no pilots available in the future. Now, with this merger, they can reduce capacity (flights) and their need for operators? Just wondering? Nah! They never look that far out into the future.
usfliboi
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Is it me or is it odd that Doug would ever ever admit this unless...unless talks are further along than we think? It is EXTREMELY rare that a CEO would acknowlege a possible takeover over another company. I dont get it! There must me a high level of confidence here?
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US Airways Affirms Interest in Possible Bid for AMR
By JACK NICAS
CHICAGO (WSJ.com) - US Airways Group Inc. acknowledged Wednesday that it has hired advisers to help it explore a possible merger with American Airlines' parent AMR Corp., which filed for bankruptcy protection on Nov. 29.
"We are, of course, always interested in studying potential value-enhancing opportunities, and part of studying these opportunities is ensuring we have good counsel," US Airways Chief Executive Doug Parker told investors on a conference call to discuss the airline's fourth-quarter earnings. "Therefore, as has been reported, we have indeed retained (investment bankers) Barclays Capital and Millstein & Co., and (law firm) Latham & Watkins LLP to help us explore our options as they relate to AMR's bankruptcy."
The Wall Street Journal reported this month that US Airways, Delta Air Lines Inc. and private-equity firm TPG Capital all are studying potential bids for AMR.
Mr. Parker and US Airways President Scott Kirby have long been vocal proponents of industry consolidation, and have made failed bids for past mergers with competitors. Mr. Parker acknowledged that his past interest in finding a suitor has fueled speculation, but cautioned that "as today's results show, US Airways does not need to participate in consolidation."
Fuller planes and higher fares helped US Airways post an $18 million profit on record revenue in the fourth quarter despite Wall Street expectations that the airline would lose money. Still, a nearly 30% jump in fuel expenses left profit 36% lower than the fourth quarter of 2010. US Airways is the fifth-largest U.S. airline by traffic and AMR is No. 3.
Mr. Parker said that after another profitable year for the Tempe, Ariz., airline—it earned $71 million in 2011—"we can now decide whether it's best for US Airways to operate as a standalone company or participate in consolidation over time, and that's what we intend to do." In 2010 the company earned $502 million.
He predicted AMR's bankruptcy will drag out for months, and "therefore we anticipate we and our advisers will be studying this situation for some time." While US Airways studies the situation, "we do not expect there will be any major developments and we have nothing to report today," he said.
For the fourth quarter, the company reported a profit of 11 cents a share, down from 17 cents a share, a year earlier. Stripping out items such as charge related to auction rate securities arbitration, the company reported per-share earnings of 13 cents, well ahead of the per-share profit of two cents predicted by analysts polled by Thomson Reuters.
Operating revenue improved 8.5% to $3.16 billion. Analysts expected $3.14 billion in revenue.
The carrier's total revenue per available seat mile jumped 9.9% from a year earlier. Load factor, or the percentage of available seats filled, rose to 81.9% from 80.6%.
By JACK NICAS
CHICAGO (WSJ.com) - US Airways Group Inc. acknowledged Wednesday that it has hired advisers to help it explore a possible merger with American Airlines' parent AMR Corp., which filed for bankruptcy protection on Nov. 29.
"We are, of course, always interested in studying potential value-enhancing opportunities, and part of studying these opportunities is ensuring we have good counsel," US Airways Chief Executive Doug Parker told investors on a conference call to discuss the airline's fourth-quarter earnings. "Therefore, as has been reported, we have indeed retained (investment bankers) Barclays Capital and Millstein & Co., and (law firm) Latham & Watkins LLP to help us explore our options as they relate to AMR's bankruptcy."
The Wall Street Journal reported this month that US Airways, Delta Air Lines Inc. and private-equity firm TPG Capital all are studying potential bids for AMR.
Mr. Parker and US Airways President Scott Kirby have long been vocal proponents of industry consolidation, and have made failed bids for past mergers with competitors. Mr. Parker acknowledged that his past interest in finding a suitor has fueled speculation, but cautioned that "as today's results show, US Airways does not need to participate in consolidation."
Fuller planes and higher fares helped US Airways post an $18 million profit on record revenue in the fourth quarter despite Wall Street expectations that the airline would lose money. Still, a nearly 30% jump in fuel expenses left profit 36% lower than the fourth quarter of 2010. US Airways is the fifth-largest U.S. airline by traffic and AMR is No. 3.
Mr. Parker said that after another profitable year for the Tempe, Ariz., airline—it earned $71 million in 2011—"we can now decide whether it's best for US Airways to operate as a standalone company or participate in consolidation over time, and that's what we intend to do." In 2010 the company earned $502 million.
He predicted AMR's bankruptcy will drag out for months, and "therefore we anticipate we and our advisers will be studying this situation for some time." While US Airways studies the situation, "we do not expect there will be any major developments and we have nothing to report today," he said.
For the fourth quarter, the company reported a profit of 11 cents a share, down from 17 cents a share, a year earlier. Stripping out items such as charge related to auction rate securities arbitration, the company reported per-share earnings of 13 cents, well ahead of the per-share profit of two cents predicted by analysts polled by Thomson Reuters.
Operating revenue improved 8.5% to $3.16 billion. Analysts expected $3.14 billion in revenue.
The carrier's total revenue per available seat mile jumped 9.9% from a year earlier. Load factor, or the percentage of available seats filled, rose to 81.9% from 80.6%.
usfliboi
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American Airlines May Have Just Found Its Knight In Shining Armor
US Airways is reportedly drawing up plans to merge with AMR, the bankrupt holding company of American Airlines, Bloomberg reports.
The move would fill a revenue gap for US Airways, while also helping fuel American's weakened hub system, which has been drained as it cut money-losing flights over the past several months.
The Tempe, Arizona-based airline has already hired Barclays Capital and Millstein & Co. to advise it before bidding on American. However, it could be more than a year away from officially announcing an agreement, as it waits for AMR to navigate bankruptcy proceedings.
The rumor follows speculation that Delta, which took over Northwest Airlines over the last decade, could also enter the fray.
Under current Chief Executive Officer Doug Parker, US Airways has made a series of failed merger attempts, including one with Delta when that airline was in bankruptcy protection.
President Scott Kirby is reportedly leading the planning committee at US Airways. A company spokesperson declined to comment.
Shares in AMR are up more than 5% on the news, to $0.45.
Read more: http://www.businessinsider.com/report-american-airlines-us-airways-2012-1#ixzz1kUyAIBEq
US Airways is reportedly drawing up plans to merge with AMR, the bankrupt holding company of American Airlines, Bloomberg reports.
The move would fill a revenue gap for US Airways, while also helping fuel American's weakened hub system, which has been drained as it cut money-losing flights over the past several months.
The Tempe, Arizona-based airline has already hired Barclays Capital and Millstein & Co. to advise it before bidding on American. However, it could be more than a year away from officially announcing an agreement, as it waits for AMR to navigate bankruptcy proceedings.
The rumor follows speculation that Delta, which took over Northwest Airlines over the last decade, could also enter the fray.
Under current Chief Executive Officer Doug Parker, US Airways has made a series of failed merger attempts, including one with Delta when that airline was in bankruptcy protection.
President Scott Kirby is reportedly leading the planning committee at US Airways. A company spokesperson declined to comment.
Shares in AMR are up more than 5% on the news, to $0.45.
Read more: http://www.businessinsider.com/report-american-airlines-us-airways-2012-1#ixzz1kUyAIBEq
The LGA-DCA slot swap with Delta was the first step in this process. A merged AA/US will now have an equal present with DL in LGA. About 25% of the market each.
Phoenix
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Personally I think it is an issue of class vs. confidence. Wolf had enough class to wear a coat and tie, knew how to handle his liquor, and kept quiet about the United merger.
BoeingBoy
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While it's too early to tell what the market shares will be - none of the new DL flights have started yet - as far as slots the percentage is quite a bit more lopsided than that. And for the 12 months through last November DL mainline already had a bigger market share than AA mainline by 5 percentage points. I suspect that once all the new slots DL gets are utilized, it will have at least twice the market share of AA, with US having a 5-6% share thanks to the Shuttle.
In other words, a US/AA merger would give the merged carrier about the same share at LGA as DL has before the swapped slots are utilized - still a distant 2nd.
Jim
usfliboi
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You know .....green with envy doesnt look good on some people...Try to hold back your jealousy??
BoeingBoy
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"He announced the news in an attempt to head off questions on the call" - "he" being Parker and "the call" being the earnings conference call.
Sounds logical to me - Parker had to know that the analyst's were going to ask since all the rumors are floating around so why not say up front what he could about the subject?
Jim
He could have simply said, when asked, that US is always looking at opportunities and AMR is not immune to that. Preemptively announcing this more detailed response seems more than just confidence.
BoeingBoy
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True, if only asked once or twice. But you know analysts, and media are even worse - a dozen people would have asked the same question worded differently in an attempt to get more info than he was apparently willing (or legally able) to give. It's not like news of hiring advisers hasn't leaked out already.
I suspect that he's trying to walk a tightrope - he wants a deal but doesn't want it to go the way of the DL bid. If he's half as smart as some give him credit for, he also knows that AA offers a lot more to US than US offers to AA. So I suspect that he, the management team, and the advisors are spending many long days trying to "put lipstick on the pig". Some of the rumors indicate that he's already looking at dismantling the US network so it could feed AA's hubs instead, all to show that US offers more to AA than it appears.
Jim
I suspect that he's trying to walk a tightrope - he wants a deal but doesn't want it to go the way of the DL bid. If he's half as smart as some give him credit for, he also knows that AA offers a lot more to US than US offers to AA. So I suspect that he, the management team, and the advisors are spending many long days trying to "put lipstick on the pig". Some of the rumors indicate that he's already looking at dismantling the US network so it could feed AA's hubs instead, all to show that US offers more to AA than it appears.
Jim
I recently saw a chart (can't find it right now) showing that, after the slot swap and divestitures to jetBlue and Westjet, DL holds about 47% of LGA slots, AA holds about 21% and US holds about 16% (shuttle and flights to eastern hubs). If those numbers are accurate, DL would still hold a big lead on a combined US-AA (at about 37% of LGA slots).
Here's an article mentioning number of slots: http://www.bloomberg.com/news/2011-10-11/delta-wins-approval-to-build-laguardia-hub-as-u-s-backs-flight-slot-trade.html
I think the chart was linked by the teenager on Flyertalk (adam?) who said that DL should segregate all domestic flights at LGA and all international flights at JFK and force connecting passengers to travel between the two. The moment the press latched on the possibility that DL might bid on AA, he posted dozens of times in the DL forum that it was a done deal and that DL would own AA very soon.
IMO, the slot swap was the biggest blunder of Parker's career. He gave away 132 slot pairs worth, potentially, hundreds of millions of dollars based on the prices in the divestiture process. That was poor pricing, but the huge blunder part was that a combined US-AA won't be able to keep many (if any) of AA's DCA slots, as US now holds probably the max. Had Parker not been so hell-bent to make the big gift to Delta, and kept the LGA slots, and US and AA combined, he would have received plenty of DCA slots held by AA plus the combined AA-US would hold the maximum number of LGA slots permitted by the antitrust enforcers (would have had to divest some).
Today, DL reported a gain of $43 million on the slot divestitures, which paid 2/3 of the cash DL gave US.
By giving away so many LGA slots, Parker guaranteed that a combined US-AA would be hobbled at LGA compared to DL. Most. Stupid. Move. Ever.
Parker may not have been able to make the most of his LGA slots, but that's never been a problem for AA. If Parker takes over AA, to whom will he give away AA's LGA slots?
JFK Fleet Service
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