US Airways Group, Inc. Announces the Sale of

[USA320Pilot]

US Airways Group, Inc. Announces the Sale of 26,315,790 Shares of Common Stock

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US Airways sells 26.3 million shares to Citi as part of public offering

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USA320Pilot comments: I believe we now know one of the reasons why US Airways' stock had an increase in price last week and a 1-day surge in volume with 42 million shares traded in 1-day.

Regards,

USA320Pilot

 

[flyJOE]

Wasn't AA's capital announcement last week also with Citi?

 

[PhxMama]

Wasn't AA's capital announcement last week also with Citi?

That was my first thought,you beat me to it Joe! What does this all mean??? Regards, Mama

 

[USA320Pilot]

FlyJoe,

According to the AP "Citigroup, Morgan Stanley and UBS are managing (AA's) offerings".

The AP noted, "Stifel Nicolaus analyst Hunter Keay said Monday that 'it appears AMR is suddenly ripe with cash.' He said AMR could end the third quarter with about $3.9 billion in unrestricted cash, among the best of the biggest five carriers as part of annual revenue. AMR still has major debt, capital spending and pension obligations looming, but Keay said Monday's announcement further solidifies the company's likelihood of avoiding bankruptcy. With the peak summer season now over, the revenue outlook for airlines is expected to grow even more dire. Analysts expect the airline's third-quarter revenue -- including part of the summer season -- will be about 20 percent below the same period in 2008."

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And, it appears the market does not like US Airways' news to sell more shares (although it will boost the company's cash position on September 28). In after market trading at 7:41 pm EDT LCC's stock is down 10.13% or 73 cents from yesterday's closing price of $5.43 per share.

Regards,

USA320Pilot

 

[hp_fa]

Frankly I was wondering why the price was up when the ownership was further diluted by the sale of the 26M shares. The market, with its drop in price, now is acting as I would have expected.

 

[a320av8r]

FlyJoe,

According to the AP "Citigroup, Morgan Stanley and UBS are managing (AA's) offerings".

The AP noted, "Stifel Nicolaus analyst Hunter Keay said Monday that 'it appears AMR is suddenly ripe with cash.' He said AMR could end the third quarter with about $3.9 billion in unrestricted cash, among the best of the biggest five carriers as part of annual revenue. AMR still has major debt, capital spending and pension obligations looming, but Keay said Monday's announcement further solidifies the company's likelihood of avoiding bankruptcy. With the peak summer season now over, the revenue outlook for airlines is expected to grow even more dire. Analysts expect the airline's third-quarter revenue -- including part of the summer season -- will be about 20 percent below the same period in 2008."

See Story

And, it appears the market does not like US Airways' news to sell more shares (although it will boost the company's cash position on September 28). In after market trading at 7:41 pm EDT LCC's stock is down 10.13% or 73 cents from yesterday's closing price of $5.43 per share.

Regards,

USA320Pilot

Nobody likes their stock diluted. There seems to be a pattern though, every time LCC hits $5 they sell more stock. Whatever it takes...

 

[USA320Pilot]

Another interesting point is that US Airways has an $850 million loan with an $850 million unrestricted cash covenant with Citi. Last year US Airways lowered its Citi unrestricted cash covenant from $1.2 billion or $850 million.

According to Robert Isom in his September 16 Crew News session "US Airways is actively trying to build its cash position."

Regards,

USA320Pilot

 

[freedom]

Another interesting point is that US Airways has an $850 million loan with an $850 million unrestricted cash covenant with Citi. Last year US Airways lowered its Citi unrestricted cash covenant from $1.2 billion or $850 million.

According to Robert Isom in his September 16 Crew News session "US Airways is actively trying to build its cash position."

Regards,

USA320Pilot

Citi ? Sweet, we can take that amount lower in the interest of national economic security concerns.

 

[back2CLT]

It's an oddly written release, but it appears that Citi is just the underwriter, and not buying the stock to hold on their account. I don't think that Citi has any significance here other than they probably got the business because of existing relationships with US and that they have a large Airline equity underwriting.

 

[VAflyGal]

Ok, kids. Which one of you analysts has your magic 8 ball ready this morning? What does this all mean???? mmmmmmmm???

 

[back2CLT]

Not much......$125 million doesn't go as far as it used to. Maybe used towards the purchase of planes so that they don't have to further erode their cash balance.

It was a very sizable offering though (about 25% increase in outstanding shares). Who wants to bet that Mgmt was buying shares on the open market when AMR ran up to try and boost the price ahead of this offering.