USAirways/America West Merger Talks -WSJ

[EyeInTheSky]

Doug Parker's statement during webcast at 1:04 PM EST.

"...Regarding the newsreports of a US Air merger. It's America West's policy not to discuss rumors and speculation. We're in an out of discussions with other carriers at various times. We believe industry consolidation is inevitable. We believe America West will play a role in that consolidation. We plan to look agressively at oportunities that come our way. Opportunities that are in the best interests of America Wests employees, stock holders, and customers. That's all we're going to say on that topic. Now, let's move into the point of the call our first quarter results...."

http://www.vcall.com/CEPage.asp?ID=91088

 

[NAPAUS]

New paint scheme...I always liked this one that I can into at http://www.cardatabase.net/modifiedairlinerphotos/. I would still keep the same tail as the current scheme...but the design change on the rest works.

[post="263329"][/post]​

GREAT LIVERY!!! Keep it just the way it is!

 

[Seatacus]

GREAT LIVERY!!! Keep it just the way it is!

[post="263340"][/post]​

That new paint job does appear to have a smile on it, hmmmmmmmmm. 🙂

 

[USA320Pilot]

Today the Wall Street Journal reported, a few months ago, according to one person familiar with the matter, US Airways' big creditors began to worry that the carrier would be on shaky financial ground when it emerged, and encouraged the company to seek a partner. Certain US Airways' key creditors -- including GE's airline financing and leasing arm -- are actively involved in the merger talks, according to people familiar with the matter.

See Story

Meanwhile, today the New York Times reported, talk of the US Airways-America West discussions floated in aviation circles in the last few weeks. According to people close to the talks, America West executives met in Washington on Friday with staff members and advisers to the Air Transportation Stabilization Board, which oversees the loan guarantees of the two airlines. US Airways owes $717 million on its package, while America West owes about $300 million. People close to the talks characterized them as well along and said that a conclusion could be reached within a few weeks.

See Story

It’s my understanding the key player behind the proposed US Airways – America West linkup is GECAS, who holds leases on about half of the combined carrier’s aircraft leases. Moreover, GE, US Airways’ creditors committee, and the ATSB reportedly are in favor of the potential deal.

Personally, I would like to see the companies create a Midwest hub/focus city and maybe STL or DEN could be an option, with a focus on EMB-170s & EMB-190s for low cost operations and new market development. That would fill in the combined business entities domestic route network.

For the US Airways – America West deal to proceed, I believe GE, RSA, or another party will need to provide the financing. In addition, I believe, US Airways' paint scheme, word mark, and headquarters would survive, and the new CEO will be either Doug Parker or Bruce Ashby.

Why? These are the key players in the deal and merger integration costs need to be controlled as much as possible. By keeping US Airways’ branding in place, there would be less planes to paint, less signage to change, less people to move, less IT changes, and the United and Star alliances could remain in-place.

US Airways and America West combined mainline fleet:

Airline A330 B767 B757 A320 family B737 Total
US Airways 9 10 31 106 79 245
America West 13 98 37 148
Total 9 10 44 204 116 393

Note (1) - The US Airways fleet plan is based on the year end 2007 fleet count of two hundred forty five mainline jets, which includes the reduction of ten A319s from February through September 2005, eleven B737s in May 2005, and fifteen B737s in 2006/2007. US Airways had an order for ten A330, thirteen A321, and six A320 deliveries in 2008 through 2010. It’s unclear whether or not the Airbus agreement will be affirmed, adjusted, or cancelled through the bankruptcy process.

Note (2) – Today in its earnings conference call, which can be heard at http://www.vcall.com/CEPage.asp?ID=91088, America West announced it will add 10 A320 family aircraft to its fleet later this year. The table above reflects this year’s upcoming aircraft deliveries.

Regards,

USA320Pilot

 

[USAirUnited]

Toss all those contracts out the window, the whole game is about to change.

 

[BoeingBoy]

I'm getting ready to leave for a 4-day, so I'll just throw this out before I go...

I can see where US would benefit from a merger - I'm still convinced that long term survival prospects are very dim as a stand-alone company.

I can see where GE would see the benefit - I suspect they have the same prognosis as I do for a stand-alone US.

I can see where the top executives of US and RSA would benefit - all that stock might be worth something after all.

Where I'm having trouble is seeing the benefit to AWA in all this. After working hard to get their house in order, what is the benefit of merging with one of, if not the, highest cost carriers in the country? A bigger presence on the East coast perhaps, but at what cost to their chances to grow & prosper?

Just food for thought......

Jim

 

[ClueByFour]

Where I'm having trouble is seeing the benefit to AWA in all this. After working hard to get their house in order, what is the benefit of merging with one of, if not the, highest cost carriers in the country? A bigger presence on the East coast perhaps, but at what cost to their chances to grow & prosper?

[post="263353"][/post]​

Jim,
You have hit the nail on the head. TPG and Bonderman ultimately decide what happens, and they (TPG) will be paid in this deal. If that's GECAS money, so be it, but Bonderman is the player that matters. TPG won't sink a perfectly good investment without being "cashed out" first.

 

[USA320Pilot]

Today in its earnings conference call in response to a question by J.P. Morgan airline analyst Jamie Baker, America West CEO Doug Parker said he believes airline mergers will have a better chance of success today because of “new labor costsâ€￾ in today’s environment. He said a number of bankruptcies allow some aircraft to be put on the ground to allow the post merger airline to be “rightsizedâ€￾ through the courts, which I believe has already occurred at US Airways. Current plans provide for US Airways’ end of May fleet count to be 265 mainline aircraft and by the end of 2007 the company is expected to have 245 aircraft, largely to satisfy GE who wants to reduce its U.S. presence and put some of its aircraft overseas. This is different from mergers in the past, Parker noted.

Parker also said mergers would benefit larger net synergies and there is a favorable regulatory environment for M&A activity. Anything America West is looking at regarding mergers would not involve current cash-on-hand, Parker said.

When asked “why not wait for an airline to fail instead of merging to acquire assetsâ€￾, Parker refused comment.

America West indicated that by the end of the year with current fundamentals the company would probably need further financing, thus this is where RSA, GE, TPG, or a private investor could be important to the Phoenix-based airline.

The comments above were paraphrased.

Regards,

USA320Pilot

 

[WorldTraveler]

Just a couple thoughts.

There is still a lot of opportunity for other carriers/entities to be involved and it is highly doubtful that HP will remain as the only entity interested in US – as an operating airline or its assets. While HP has low costs which everyone likes, other carriers/financiers have low costs and/or deeper pockets. The reality is that AA or NW could pick up US if they wanted to based on pocket depth. HP will have to obtain outside financing and ATSB approval for any combination of HP and US to occur; AA or NW could very easily trump the deal by agreeing to pay off the government’s stake in US first. US still has very valuable market positions which will be contested; the implications to other carriers should US end up in another carrier’s ends will be carefully evaluated by each competitor. This is the first salvo in consolidation and it won’t necessarily unfold the way any of us expect.

Should HP tie up with US, it could have implications on UA and Star but it doesn’t necessarily mean that UA will pull the plug on US, although it would be hard for UA and HP to work together. I think it is very possible that the current partnerships could be reworked. I’m not sure the CO-DL-NW partnership is really working as intended due to too many competing minds. I foresee UA initiating talks with DL about a partnership; in reality, UA and DL are a far better network match than are any two carriers. Further, both have poor performing capacity in parts of the country where the other is strong so there is real opportunity to rationalize industry capacity if UA and DL were to cooperate. Given the financial needs both have, I believe investors will be willing to line up to support DL and UA if they see fundamental changes in both companies business plans which could well happen through a much more dramatic restructuring than has been proposed so far. However, it is not necessary for UA and DL to merge or acquire each other for these benefits to occur.

 

[WorldTraveler]

I agree that mergers are more likely to work from both a regulatory perspective and from the ability to get costs out. Much of the remaining costs in the legacies are due to duplicated capacity and operations.

As for the DL and UA comments I’ve made, it is noteworthy that UA is in bankruptcy. Just as with US, UA’s investors want to salvage what they have and there aren’t too many decent alternatives on the horizon.

 

[tadjr]

what is the benefit of merging with one of, if not the, highest cost carriers in the country? A bigger presence on the East coast perhaps, but at what cost to their chances to grow & prosper?

[post="263353"][/post]​

Can only speak for the CWA people. We are just at $4/hr topout over HP. We have about 3000 leaving. Many are being outsourced, most of the rest can be replaced with starting pay employees. HP does not have ANY employees in many cities. They are contracted out. No HP employees in TPA so they could switch to US handling their 3 flights without adding more people to the current US roster. HP is negotiating their first contract for their Customer Service people so even though they are currently some of the lowest paid in the industry, they now have a lowered bar to aim for in negotiations vs what might have been requested had US not been brought down (think of trying to reach NW/UA/DL/AA/WN levels). From a CS standpoint, the company might be willing to offer the $17 topout and other diminished US items since it would still be a step up for HP people, but wouldnt necessarily break the bank systemwide.

 

[ITRADE]

GREAT LIVERY!!! Keep it just the way it is!

[post="263340"][/post]​

It reminds me of Shamu.

 

[USA320Pilot]

Bronner Says US Airways, America West In M&A Talks

See Story

Regards,

USA320Pilot

 

[Furloughedagain]

The following is a HP News Flash, which is distributed to all of HP's employees:

This evening, the Wall Street Journal published a story about a potential America West/US Airways merger. As a publicly traded company, our response to any media inquiries like this is that we, as a general policy, do not comment on rumors and speculation.

What we can say is that the entire America West team has worked very hard during the last several years to position our company for future success and growth. Each of our 13,500 employees should take great pride in how far you have brought this airline. As you know, and as we communicated during the potential acquisition of ATA airlines last year, we will only embark upon a strategy that benefits our company, our employees, our shareholders and our passengers.

That said the best course of action for America West at this time is to continue to run a great airline and take care of our customers. Whether consolidation is a fix that starts to occur very quickly or transpires over the next several years, we have to make sure America West is as strong as it can be should any opportunities arise. Please do your best not to worry about the rumors and continue doing the great job you are for America West.

 

[usair_begins_with_u]

ITRADE - beautiful photoshop work there buddy!!! 🙂

Is it just me, or does that press release sound like HP just got caught by his buddies hooking up with a fat chick??