US Airways to Resume Order Talks With Boeing, Airbus

700UW

Corn Field
Nov 11, 2003
37,637
19,488
NC
US Airways to Resume Order Talks With Boeing, Airbus (Update2)

By Mary Schlangenstein

Feb. 7 (Bloomberg) -- US Airways Group Inc. may announce an order for about 60 new aircraft by midyear after dropping its $9.75 billion hostile takeover bid for Delta Air Lines Inc., Chief Executive Officer Doug Parker said.

US Airways, the seventh-largest U.S. carrier by passenger traffic, will restart talks with planemakers Boeing Co. and Airbus SAS that were suspended when it went public Nov. 15 with the offer for bankrupt Delta, Parker said today in an interview.

``A lot of work already has been done, so we don't have to start over,'' said Parker, 45, describing the earlier talks with Boeing and Airbus as ``reasonably far along.'' He said the order may come ``in the first half of this year.''

New jets would allow Tempe, Arizona-based US Airways to begin replacing the 95 older-model Boeing 737-300s and 737-400s that the carrier has been targeting for upgrades since 2003, when it was operating as America West Airlines. It also wants to replace some of its 46 757-200 aircraft.

In addition to boasting more modern cabins, newer jets typically have lower operating costs because of more fuel- efficient engines and other technological improvements.

Airbus spokeswoman Mary Anne Greczyn declined to confirm or deny talks with US Airways. Boeing spokesman Jim Condelles also declined to comment.

``With US Airways dropping its acquisition offer for Delta, the carrier is free to focus on its own future fleet plans, without the complexity of trying to merge its fleet with Delta's,'' William Warlick, a Fitch Ratings Inc. analyst in Chicago, said in a Feb. 2 report.

US Airways' Fleet

Airbus planes in the A320 family carry list prices of $52.8 million to $81.6 million, and an order for 60 would be valued at as much as $4.9 billion. Newer 737 models, including the -700, -800 and -900 series, list for $54 million to $80.5 million, meaning a 60-plane order would have a maximum value of $4.83 billion. Airlines usually receive discounts on list prices.

US Airways has 357 Airbus and Boeing jets in its mainline fleet. About 57 percent, or 205 planes, are from Airbus.

The older-model, twin-engine 737s are about 18 to 20 years old, the oldest in the fleet, according to Airclaims, an industry database. The 737s are the largest single aircraft type among US Airways' 152 Boeings.

US Airways has 37 firm orders for Airbus planes to be delivered in 2008 through 2010, the airline said. The carrier also has firm orders for 22 Embraer 190 100-seat jets being delivered this year through 2012. It also holds options to add to both orders.

No New Targets

Parker, speaking a week after US Airways abandoned its Delta bid, said the airline isn't pursuing any other takeover targets now and doesn't plan to do so unless rivals begin consolidating.

``If things happen, we need to be ready to respond, but we're not trying to make things happen,'' said Parker, who was in Charlotte, North Carolina, today for an employee meeting. ``We believe the industry will still be stronger with and could use consolidation at some point. If everyone else wants to stand still, we are happy to stand still.''

US Airways pulled its bid of $5 billion cash and 89.5 million shares after Delta's bankruptcy creditors said they would support the Atlanta-based carrier's plan to leave court supervision as an independent company.

``We did a good job of pursuing a transaction we thought made a lot of sense, and did so in a professional way,'' Parker said. ``The creditors decided they didn't want to chose that scenario. That's fine by us. We think it was the wrong decision.''

`Natural Conflict'

US Airways knew there was a ``natural conflict'' on the creditors committee, Parker said. Committee members such as Boeing, Coca-Cola Co. and Delta's pilots union tried to secure the best return for other creditors even as they ``have a relationship with Delta's management team,'' he said.

US Airways' biggest concern isn't rival carriers exiting bankruptcy with lower costs, Parker said. Instead, he said he fears that airlines will begin adding back capacity as they return to profit after five years of industrywide losses.

``At this point, it doesn't look like anyone has those types of plans,'' he said. U.S. airlines increased fares 10 times last year, in part because travel demand rose even as the industry's capacity declined.

US Airways will expand international flights slowly, adding three European destinations this year, just as it did in 2006, Parker said.

``We'll continue to do some of that, but it's much more tactical than a huge strategic initiative,'' he said. Delta and UAL Corp.'s United Airlines have increased international flights while slowing domestic growth.

Shares of US Airways fell 23 cents to $58.08 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have doubled in the past 12 months.

To contact the reporter on this story: Mary Schlangenstein in Dallas at [email protected]

Last Updated: February 7, 2007 16:19 EST

Funny a cetain pilot said they were in talks, funny how the company says there were suspended on 11/15/06, how can he be wrong again?
 
700UW,

How could you be so wrong again? If you remeber I said the company was in talks with both Boeing and Airbus and people like Nycbusdriver indicated the company would never talk to Boeing.

As you know, this article confirmed my comments, which makes you sick, just like the "Project Minnow" articles.

I know it's tough on you when I am right and you're consistently wrong. :up:

Regards,

USA320Pilot
 
The Chief Pilot in LGA really needs to send you to the EAS.

You are the poster child for being wrong.
 
You gotta be kidding me.

:blink:

Yeah, no fooling. Isn't this the same :wacko: that considers this a "second class message board", chose to give a full bore lecture on lacking decorum, always asks when would now (not my fractured syntax, I promise) be a good time to grow up? Oh, and lest we forget the all time favorite moral high-horse discourse on which post is such a waste of bandwidth! :lol:

:wacko: One's own words, as they say..... :wacko:

:lol: Yes, boys and girls, the laughs just keep on coming! :lol:

Getting to the article posted by 700UW, the talks were suspended in November, 2006 and will restart. Does anyone know when they might resume?