With a key deadline fast approaching, United Airlines is seeking to discard its current $12.3 billion deal to acquire US Airways and devise a new plan, the Washington Post reported on Saturday.
Citing sources, the newspaper said United, the world's largest airline and a unit of UAL Corp (UAL.N), was seeking changes in the acquisition proposals in an effort to get a lower price and to address regulatory concerns that the deal could stifle competition.
Sources told the Post United is considering several changes, including buying only parts of US Airways instead of the whole airline. United was also considering selling some routes to low-fare carriers to generate competition, the sources said.
The Post said all three airlines declined comment.
The online NY Times subscription is free, however.
doc
Jul 1, 01, 9:31 am
And they request very little info from you too! Great source, IMHO! http://www.flyertalk.com/forum/smile.gif
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United to Drop Purchase
UAL Corp.'s United Airlines is prepared to drop its planned $4.3 billion purchase of US Airways, citing regulatory problems and the worsening economy, according to a published report.
US Airways, which has suffered widening losses in recent months, far beyond the effects of the economic slowdown on other airlines, now has to devise a new strategy to prosper as an independent airline serving millions of passengers in critical cities like Washington, New York and Boston.
In April, Rakesh Gangwal, its chief executive, said that the Airline had no ``Plan B'' if the takeover by United was not approved. Mr. Gangwal and Stephen M. Wolf, its chairman, have tried to convince opponents of the merger that US Airways could not survive on its own.
After a meeting of UAL directors last week, United told US Airways it wants to discuss terminating their agreement prior to the Aug. 1 walkaway date. At that time, United can unilaterally drop the deal and pay US Airways a $50 million breakup fee. It wasn't clear today whether an early termination would be accepted by US Airways or whether the carrier might sue United.
US Airways declined to comment Sunday, as did United. AMR Corp.'s American Airlines, which was brought into the transaction in January as a buyer of some $1.2 billion of US Airways assets, couldn't immediately be reached.
``We still believe the merger was the right course for us,'' the Washington Post quoted an unidentified United executive as saying. ``But we can't satisfy the Department of Justice concerns. So we decided to abandon the transaction.''
Spokesman for United and US Airways declined to comment.
Meanwhile, United insists publicly that it wants to push through the deal. But some insiders say United has been dragging its feet, waiting until the Aug. 1 deadline has passed.
"I think they're having seller's remorse," one airline source said, referring to the high price United was offering for a diminishing asset.
A person who talked to top executives at US Airways said that the airline would have to accept any decision United made, but that ending the agreement would be disappointing because it was still in the best interests of shareholders, employees and the communities US Airways serves.
[This message has been edited by doc (edited 07-02-2001).]
doc
Jul 2, 01, 10:08 am
Shares of US Airways were not trading early Monday, while shares of UAL were up 50 cents to $35.65 on the New York Stock Exchange, well off their 52-week high of $61.62.
AND:
UAL Corporation and US Airways Group, Inc in Discussions to Terminate Merger
CHICAGO, July 2 /PRNewswire/ -- UAL Corporation (NYSE: UAL - news), the company whose primary subsidiary is United Airlines, and US Airways Group, Inc (NYSE: U - news) today issued the following statement regarding their proposed merger:
``UAL Corporation and US Airways Group, Inc have confirmed that they are in discussions regarding the possibility of terminating the proposed merger between the two companies prior to the August 1 termination date.''
http://biz.yahoo.com/prnews/010702/cgm034.html
AND:
Neidl said the wide spread between the US Airways' share price and what United was going to pay was a clear sign that the deal was in danger.
``The market was pretty much discounting any takeover,'' he said.
[This message has been edited by doc (edited 07-02-2001).]
chexfan
Jul 2, 01, 10:26 am
Wait, now I am going to have to fly 100,000 miles on UA alone to be a 1K this year? http://www.flyertalk.com/forum/mad.gif
doc
Jul 2, 01, 12:54 pm
Some advice from the CEO og NWA:
"They need to begin acting responsibly and focus on fixing that airline," Richard Anderson, the chief executive of Northwest Airlines, said during an interview on Friday.
Warren Buffett once said in a speech at the University of North Carolina's business school that if a capitalist had been present when the Wright Brothers made their historic flight, he should have shot the plane down. But I think US Airways may have finally come upon a perfect way to make money: Keep agreeing to mergers with other companies, and then wait for them to back out.
http://biz.yahoo.com/mf/010702/news02_010702.html
But airline-watchers have said for months that the expensive deal no longer made economic sense regardless, suggesting that Elk Grove Village, Ill.-based United was looking for a way out.
``United saw they were going to end up with a giant mess to merge, while American was in a position to eat their lunch,'' said Boyd.
American's takeover of failing Trans World Airways gives it about 900 jets and three east-west connecting hubs in Dallas-Fort Worth, St. Louis and Chicago,-- compared with United's 700 jets and two east-west hubs in Chicago and Denver, he noted.
With United Deal Seemingly Kaput, US Airways Is Forced to Rethink Strategy
Recent newspaper ads for US Airways exhort potential customers to ``Pick me. Pick me.''
The message fairly represents the money-losing carrier's desperation to attract more travelers. But analysts say the situation for the nation's sixth largest airline is looking grim now that its engagement to United Airlines is on the rocks.
``They're going to have to figure out a way to be responsible and make the airline work,'' said Helane Becker, an analyst with Buckingham Research Group.
Aviation analysts said Arlington, Virginia-based US Airways may be forced to sell off its assets as an alternative to the takeover that promised to stave off financial concerns and low-fare rivals.
``US Airways are facing some major challenges. They might sell the airline piecemeal or try to fix the problem of not earning any profits,'' said Ray Neidl
http://biz.yahoo.com/rf/010702/n02289675.html
[This message has been edited by doc (edited 07-02-2001).]
doc
Jul 3, 01, 6:15 am
In a recorded message to employees yesterday, Mr. Wolf and Mr. Gangwal said that combining with United was "no longer an option." They added that "for some time" they had been studying "various options and scenarios should the merger not be consummated." They said that they would review these choices with the airline's board on July 18.
US Airways finds itself too strong to be considered a failing carrier, which would have helped it win regulatory approval for its deal with United, but too weak to mount a viable defense against an armada of competitors closing in on its lucrative East Coast base. "They are being hit on all sides — both by the bigger network competitors and smaller, lower-cost competitors," said Raymond E. Neidl, an airline analyst at ABN Amro Securities. "They are a long way from having to close the doors but the deterioration is going to accelerate."
If US Airways chooses not to make it on its own, Mr. Neidl and others say it has two obvious options: find another suitor or sell itself in pieces.
The impending demise of the proposed merger between United Airlines and US Airways was welcomed by industry experts and politicians alike, even though the two carriers were reluctant to officially proclaim their troubled 13-month relationship over.
Airline analysts said that after being overtaken by American Airlines as the world's largest carrier, United can now devote more attention to improving service and on-time problems that haven't been fully resolved from last year.
"United saw they were going to end up with a giant mess to merge, while American was in a position to eat their lunch," said airline industry consultant Michael Boyd.
In Washington, the chairman and ranking member of the Senate Antitrust Subcommittee applauded the fact that the deal "appears to be void."
"This merger, if permitted to occur, would have resulted in less choice and higher fares for millions of American air travelers," Sens. Herb Kohl of Wisconsin and Mike DeWine of Ohio said in a joint statement.
After months of speculation that the proposed $4.3 billion acquisition was doomed to failure, United and US Airways issued a terse statement Monday saying they are in talks "regarding the possibility of terminating the proposed merger."
Political opponents of the deal were pleased. Senators Herb Kohl (D., Wis.) and Mike DeWine (R., Ohio), chairman and ranking member, respectively, of the Senate Antitrust Subcommittee, said Monday the deal would have led to "dangerous levels of concentration" in the industry, and fewer choices and higher fares for consumers.
[This message has been edited by doc (edited 07-03-2001).]
doc
Jul 5, 01, 7:12 am
A marriage canceled at the altar usually isn't cause for celebration. But when the proposed partners are major airlines, consumers may be forgiven for cracking a smile. With the demise this week of the United Airlines and US Airways deal, travelers escaped a merger that likely would have resulted in fewer competitive routes and higher fares.
The collapse of the merger with US Airways could end up being a blessing in disguise. The deal would have saddled UAL with $28 billion in debt, according to Standard and Poor's. Many analysts and airline executives saw UAL's offer of $60 a share as far too generous last May, when US Airways stock was trading at $26 a share. In the wake of the current industry downturn, paying that price would have been "outrageous," Mr. Dubinsky said.
US Airways passengers are flying off into unsettled skies. But even that is a better deal than they would have received from the airline's now-grounded merger with United Airlines.
[This message has been edited by doc (edited 07-09-2001).]
doc
Jul 9, 01, 6:53 am
The apparent end of United Airlines' plans to acquire US Airways Group Inc. left investors worried about the Arlington-based company's future, driving down its stock price 30 percent last week.
US Airways was the only non-technology company among the biggest losers last week in The Washington Post-Bloomberg regional stock index. It finished the week at a 52-week low of $16.90 a share.
US Airways has told its employees that the merger deal with United Airlines is off and there will be no effort to revive it, union leaders said yesterday.
The message was delivered Friday by US Airways President Rakesh Gangwal at a meeting with union officials at the airline's Arlington headquarters, which company sources confirmed. Gangwal told the union representatives that management will decide the airline's future at a special board meeting July 18.
He said management decisions will be made at that meeting regarding the airline's business plan, programs and goals, according to union leaders who attended.
The meeting with the unions came as industry analysts were saying that US Airways Chairman Stephen M. Wolf was left with two options: Sell the airline to its unions, as he had done with United Airlines in 1994, or break up the carrier and sell its parts. Wolf served as chairman of United until he sold the airline to its employees as part of an employee stock-ownership plan.
The US Airways Air Line Pilots Association (ALPA) Master Executive Council, which represents US Airways' 6,100 pilots, announced today that it will continue to insist that management return to the planned competitive structuring of US Airways, which was abandoned in its infancy to pursue a merger with United. This announcement precedes the US Airways Board of Directors meeting on July 18, called to consider management ``options'' for the airline's future in the aftermath of United's request to terminate the merger agreement.
http://biz.yahoo.com/prnews/010717/dctu045.html
USAirGreg
Jul 22, 01, 12:19 pm
If USAirways and United Merge, I'll be a very happy camper... At Northwest.
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"We are dimming the cabin lights to enhance the beauty of our flight crew" - Actual Quote.
A Justice Department ruling on the $12.3 billion acquisition of US Airways by United Airlines could come as early as this week, sources close to the deal said yesterday.
In what a source described as a "critical week for discussions," executives from United, US Airways, American Airlines and the newly created DC Air were to meet today at Justice Department headquarters here with senior department officials including Deputy Attorney General R. Hewitt Pate as well as officials from state attorneys general offices of New York, Pennsylvania and Maryland. Pate is overseeing the deal within the antitrust agency.
The airline executives, as they did last week, are expected today to outline what they consider to be the deal's competitive benefits. The executives also are to discuss proposed anti-competitive remedies that would appease antitrust concerns. The remedies include splitting up the ownership of US Airways' East Coast shuttle operations between United and American. Another discussion topic is the creation of DC Air, which was to be created as part of the deal and headed by Black Entertainment Television founder Robert L. Johnson.