seawolf
Jun 21, 01, 7:36 am
Thursday June 21, 12:55 am Eastern Time
Paper: American Air 'Ambivalent' About Deal
WASHINGTON (Reuters) - American Airlines' chief executive said he was ``more ambivalent'' about a proposed deal to acquire part of US Airways Group (NYSE:U - news), given the industry's mounting losses, USA Today reported on Thursday.
Donald Carty, CEO of American, the world's largest airline and a unit of Fort Worth, Texas-based AMR Corp. (NYSE:AMR - news), told the paper in an interview Wednesday that the current environment had dampened American's interest in the deal.
``We've become a little more ambivalent because of the financial duress the industry is under,'' the paper quoted him as saying in a meeting with USA Today editors and reporters.
``The acquisition of US Airways or any assets of US Airways
involves more capital, and therefore we have some ambivalence about spending capital in this kind of environment,'' the paper quoted him as saying.
American warned on Monday that it expects to post a second-quarter loss of more than $100 million, blaming the flagging U.S. economy and high fuel prices.
Major U.S. airlines have been hit hard by the drop in business travel as corporations cut costs in the harsh economic environment. Lucrative business travel provides about two-thirds of airline revenues industrywide.
In January, American announced plans to spend $1.2 billion cash to acquire a chunk of US Airways -- including half the Northeast Shuttle -- from UAL Corp.s (NYSE:UAL - news) United Airlines as part of its proposed $4.3 billion merger with US Airways.
United brought in American in hopes of overcoming antitrust concerns about its initial plan to absorb US Airways itself.
Carty told USA Today that on Aug. 1, any of the airlines involved in the deal can walk away and avoid paying large penalties. At that time, the airlines could rework their deal or let it die, the paper quoted him as saying.
Carty said American was surprised to find United had no understanding with federal regulators that bringing American in would solve their antitrust concerns about United's merger with US Airways.
``United hadn't made any deal with Justice or gotten any indication from Justice'' that dividing assets between United and American would improve the deal's chances, he said.
He said American agreed to buy part of US Airways to protect its interests along the strategically vital East Coast.
United on Wednesday declined to comment on Carty's remarks. Spokesman Andy Plews said only that the airline ``continues to push for approval of the transaction.''
Carty said American would be willing to rewrite aspects of the plan Justice dislikes, such as the proposal for American and United, the two largest U.S. airlines to jointly operate and price US Airways' shuttle flights serving Washington, New York and Boston.
``I suspect what's controversial is the collaborative marketing of the shuttle,'' the paper quoted him as saying. ``If the Justice Department has some problems with that, it's not impossible to find a formula where we can collaboratively operate it and compete in the marketplace.''
He said United and American haven't discussed such changes.
Paper: American Air 'Ambivalent' About Deal
WASHINGTON (Reuters) - American Airlines' chief executive said he was ``more ambivalent'' about a proposed deal to acquire part of US Airways Group (NYSE:U - news), given the industry's mounting losses, USA Today reported on Thursday.
Donald Carty, CEO of American, the world's largest airline and a unit of Fort Worth, Texas-based AMR Corp. (NYSE:AMR - news), told the paper in an interview Wednesday that the current environment had dampened American's interest in the deal.
``We've become a little more ambivalent because of the financial duress the industry is under,'' the paper quoted him as saying in a meeting with USA Today editors and reporters.
``The acquisition of US Airways or any assets of US Airways
involves more capital, and therefore we have some ambivalence about spending capital in this kind of environment,'' the paper quoted him as saying.
American warned on Monday that it expects to post a second-quarter loss of more than $100 million, blaming the flagging U.S. economy and high fuel prices.
Major U.S. airlines have been hit hard by the drop in business travel as corporations cut costs in the harsh economic environment. Lucrative business travel provides about two-thirds of airline revenues industrywide.
In January, American announced plans to spend $1.2 billion cash to acquire a chunk of US Airways -- including half the Northeast Shuttle -- from UAL Corp.s (NYSE:UAL - news) United Airlines as part of its proposed $4.3 billion merger with US Airways.
United brought in American in hopes of overcoming antitrust concerns about its initial plan to absorb US Airways itself.
Carty told USA Today that on Aug. 1, any of the airlines involved in the deal can walk away and avoid paying large penalties. At that time, the airlines could rework their deal or let it die, the paper quoted him as saying.
Carty said American was surprised to find United had no understanding with federal regulators that bringing American in would solve their antitrust concerns about United's merger with US Airways.
``United hadn't made any deal with Justice or gotten any indication from Justice'' that dividing assets between United and American would improve the deal's chances, he said.
He said American agreed to buy part of US Airways to protect its interests along the strategically vital East Coast.
United on Wednesday declined to comment on Carty's remarks. Spokesman Andy Plews said only that the airline ``continues to push for approval of the transaction.''
Carty said American would be willing to rewrite aspects of the plan Justice dislikes, such as the proposal for American and United, the two largest U.S. airlines to jointly operate and price US Airways' shuttle flights serving Washington, New York and Boston.
``I suspect what's controversial is the collaborative marketing of the shuttle,'' the paper quoted him as saying. ``If the Justice Department has some problems with that, it's not impossible to find a formula where we can collaboratively operate it and compete in the marketplace.''
He said United and American haven't discussed such changes.