America West & US Airways merger official.

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Old May 19, 05, 2:37 pm
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America West & US Airways merger official.

It's being reported on CNBC right now.

Here's what's being reported about the deal...
  • merger supposed to take place on a stage-by-stage basis.
  • $1 billion in equity raised from Airbus($250million), Air Canada, Air Wisconsin, hedge funds, some rights offerings, and sale/lease back of aircraft.

Last edited by ByrdluvsAWACO; May 19, 05 at 2:53 pm
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Old May 19, 05, 3:04 pm
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No "official" word yet, but is imminent.


Originally Posted by ByrdluvsAWACO
It's being reported on CNBC right now.

Here's what's being reported about the deal...
  • merger supposed to take place on a stage-by-stage basis.
  • $1 billion in equity raised from Airbus($250million), Air Canada, Air Wisconsin, hedge funds, some rights offerings, and sale/lease back of aircraft.
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Old May 19, 05, 3:19 pm
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Originally Posted by ByrdluvsAWACO
It's being reported on CNBC right now.

Here's what's being reported about the deal...
  • merger supposed to take place on a stage-by-stage basis.
  • $1 billion in equity raised from Airbus($250million), Air Canada, Air Wisconsin, hedge funds, some rights offerings, and sale/lease back of aircraft.

http://www.msnbc.msn.com/id/7908207/

NEW YORK - America West Holdings Corp. and US Airways Group, Inc. are merging, creating the sixth largest U.S. airline.

According to a press release on America West’s Web site, America West CEO Doug Parker said: "Building upon two complementary networks with similar fleets, closely-aligned labor contracts and two outstanding teams of people, this merger creates the first nationwide full service low-cost airline. Through this combination, we are seizing the opportunity to strengthen our business rather than waiting for the industry environment to improve. A combined US Airways/America West places the new airline in a position of strength and future growth that neither of us could have achieved on our own."

US Airways President and CEO Bruce Lakefield said: "US Airways has a strong franchise and great employees that will be enhanced by America West's strengths and success in the low-fare, low-cost marketplace. That we have secured such an impressive slate of equity investors and partner support in a period of such industry uncertainty is a strong indication of the prospects and enthusiasm for this transaction. It has been my objective to ensure the long-term viability of US Airways and the security of our outstanding employees; this merger with America West will accomplish that objective."

Subject to approval by the U.S. Bankruptcy Court overseeing US Airways' pending Chapter 11 case and transaction closing, which is anticipated to occur this fall, the merged airlines will operate under the US Airways brand under the leadership of CEO Doug Parker.
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Old May 19, 05, 3:24 pm
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It's official. The press release:

http://www.shareholder.com/americawe...leaseID=163980
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Old May 19, 05, 3:29 pm
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Here's the release. Lots of good, juicy details:

* New airline to provide customers full-service offerings and consumer-friendly pricing structure of a low-cost low-fare carrier * Transaction is expected to be financed with approximately $1.5 billion of new capital from: * $350 million of committed new equity plus a planned rights offering * More than $675 million from partners and suppliers * $250 million or more from aircraft-related financings and/or sales * Expected release of $200-300 million in cash reserves * The combination would form one of the industry's most financially stable airlines with $10 billion in annual revenues, approximately $2 billion in total cash and among the lowest debt levels of all major airlines * The new airline is expected to have one of the most efficient work groups in the industry. Once the anticipated annual cost savings and revenue synergies of over $600 million are implemented, the new airline will be positioned for profitability at oil prices above $50 per barrel * The new airline will operate under a single brand of US Airways, but its operational labor groups will be integrated over two to three years with emphasis on minimizing any dislocations within the work groups

PHOENIX, May 19, 2005 /PRNewswire-FirstCall via COMTEX/ -- America West Holdings Corporation (NYSE: AWA) and US Airways Group, Inc. (OTC Bulletin Board: UAIRQ) today announced an agreement to merge and create the first full-service nationwide airline, with the consumer-friendly pricing structure of a low-fare carrier. Operating as the first national low-cost (LCC) hub-and-spoke network carrier, customers can look forward to simplified pricing, international scope, access to low-fare service to over 200 cities across the U.S., Canada, Mexico, the Caribbean and Europe, and amenities that include a robust frequent flyer program, airport clubs, assigned seating and First Class cabin service.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050223/LAW097LOGO)

America West Holdings Corporation Chairman, President and CEO Doug Parker said: "Building upon two complementary networks with similar fleets, closely-aligned labor contracts and two outstanding teams of people, this merger creates the first nationwide full service low-cost airline. Through this combination, we are seizing the opportunity to strengthen our business rather than waiting for the industry environment to improve. A combined US Airways/America West places the new airline in a position of strength and future growth that neither of us could have achieved on our own."

US Airways President and CEO Bruce Lakefield said: "US Airways has a strong franchise and great employees that will be enhanced by America West's strengths and success in the low-fare, low-cost marketplace. That we have secured such an impressive slate of equity investors and partner support in a period of such industry uncertainty is a strong indication of the prospects and enthusiasm for this transaction. It has been my objective to ensure the long-term viability of US Airways and the security of our outstanding employees; this merger with America West will accomplish that objective."

Subject to approval by the U.S. Bankruptcy Court overseeing US Airways' pending Chapter 11 case and transaction closing, which is anticipated to occur this fall, the merged airlines will operate under the US Airways brand under the leadership of CEO Doug Parker. The merged airline's 13-member board will be comprised of one member from each of three new equity investment companies, six members from the current America West board, including Parker as chairman, and four members from the current US Airways board, including Lakefield as vice-chairman. The combined airline's headquarters will be consolidated into America West's headquarters in Tempe, Ariz. For regulatory purposes, both airlines will operate under separate operating certificates for a transition period of two to three years, keeping flight crew, maintenance and safety procedures for each airline separate. To ensure that the substantial consumer benefits are realized quickly, however, the airlines will work together to coordinate schedules, frequent flyer programs and other marketing programs as soon as practical.

Lakefield continued: "We believe that the airline created from the merger of US Airways and America West will bring more choices for customers, as we expand the low-fare pricing structure of America West to dozens of new cities, while also offering passenger-service amenities, such as an attractive frequent flyer program, assigned seating and a First Class cabin."

Customers

With the creation of the first full-service nationwide airline, customers will enjoy simplified pricing across an expanded east/west network along with access to international destinations. Both airlines' frequent flyer programs will ultimately be combined once the merger is complete. Members of both programs will retain all of their miles and elite status designation and will receive similar benefits in the merged airline's frequent flyer program. Other customer amenities will include access to airport clubs, assigned seating and First Class upgrades.

Financing

The merger is expected to create one of the industry's most financially stable players, with over $10 billion in annual revenues and a strong balance sheet that includes approximately $2 billion in total cash at closing with which to weather the current industry environment and fund further growth strategies. The airline's strong cash balance is expected to be created through a combination of current cash on hand at US Airways/America West, $350 million of new equity commitments (which may be supplemented with additional commitments), and proceeds from a contemplated $150 million rights offering. In addition, the merged airline will receive cash infusions of over $1.1 billion, principally from partners and suppliers (approximately $675 million), asset-based financings or sales of surplus aircraft (approximately $250 million) and release of certain cash reserves (approximately $200-300 million).

The $350 million of new equity is expected to be provided by four separate investor groups. The new investors are: ACE Aviation Holdings Inc., ($75 million commitment) a Canadian holding company that owns Air Canada, Canada's largest airline with over $7.5 billion in annual revenues; PAR Investment Partners, L.P., ($100 million commitment) a Boston-based investment firm; Peninsula Investment Partners, L.P., ($50 million commitment) a Virginia-based investment firm; and Eastshore Holdings LLC, ($125 million commitment and agreement to provide regional airline services), which is owned by Air Wisconsin Airlines Corporation and its shareholders. The merged company also plans to conduct a rights offering that could provide an additional $150 million of equity financing.

Approximately $675 million of additional cash financing is being secured through a combination of refunding of certain deposits, debt refinancing (which reduces collateralization) and signing bonuses from companies interested in long-term business relationships with the merged airline. The companies have signed commitments or firm proposals for more than $425 million in additional cash liquidity from strategic partners and vendors, including over $300 million in a signing bonus and a loan from prospective affinity credit card providers for the merged company. Negotiations with credit card companies are still in progress. Another $250 million will come from Airbus in the form of a loan. The companies have also agreed that the merged company will be the launch customer for the Airbus A350, with deliveries scheduled from 2011 to 2013.

Synergies

"We are exceptionally pleased with the financial support this transaction has received, but it would not be available if we did not have a business model that worked in today's difficult industry environment," said Parker. "We have created a competitive business that is profitable even with oil prices at $50 per barrel, achieved primarily because of the $600 million of annual net operating synergies. These synergies are higher than generally experienced in airline mergers for two reasons. First, US Airways and America West now have very similar labor costs so there are no large negative synergies related to contract integration, and second, US Airways' bankruptcy allows us to right-size capacity, thus increasing the network synergies."

The $600 million in anticipated annual synergies are the result of route restructuring, revenue synergies and cost savings. Route restructuring synergies of approximately $150-200 million are created by reducing aircraft and unprofitable flying, better matching aircraft size to consumer demand by route and incorporating Hawaii service into the network. Revenue synergies of $150-200 million are achieved by taking two largely regional airlines and creating one nationwide, low-cost carrier that can provide more choice for consumers when combined with improving connectivity across both airlines' networks and by increasing aircraft and other asset utilization. Lastly, the combined airline expects to realize cost synergies of $250-300 million annually by reducing administrative overhead, consolidating both airlines' information technology systems and combining facilities.

In addition to the operating synergies created by the merger, the new relationship with Air Canada provides for even greater operating improvements. The merged airline and Air Canada plan to work together to create value for each other through maintenance contracts, airport handling agreements and the eventual expansion of the Star Alliance agreement, which could include codesharing with Air Canada, consistent with the U.S.-Canada bilateral aviation agreement.

Fleet/Route System

US Airways/US Airways Express currently serves 179 cities and America West/America West Express serves 96 cities. When merged, the combined airline will become the nation's fifth largest airline, as measured by domestic Available Seat Miles (ASMs). The combined airline is expected to operate a mainline fleet of 361 planes (supported by 239 regional jets and 57 turboprops for feed into the mainline system), down from a total of 419 mainline aircraft operated by both airlines at the beginning of 2005.

US Airways projects returning 25 additional aircraft by the end of 2006, in addition to the 46 aircraft that US Airways already has announced it plans to return. Nearly all of the aircraft are being returned to General Electric Capital Aviation Services (GECAS). The combined airline also will take delivery of 13 Airbus A320 family aircraft previously ordered by America West Airlines. Airbus has also agreed to reschedule and reconfirm 30 narrow body A320-family aircraft deliveries from 2006 - 2008 to 2009 - 2010. To rationalize international flying, the merged company will work with Airbus to transition to an all-Airbus international fleet of A330 aircraft and, beginning in 2011, A350 aircraft.

Once fully integrated, the airline plans to have primary hubs in Charlotte, Phoenix and Philadelphia, and secondary hubs in Las Vegas and Pittsburgh. The merged airline plans to have focus cities in Boston, New York/LaGuardia, Washington, D.C., and Fort Lauderdale.

People/Culture

US Airways currently employs 30,100 people and America West employs 14,000 people. Contract integration of represented employees is expected to occur after integrated seniority lists have been negotiated between each respective airline's labor groups.

America West's Parker continued: "Although US Airways and America West are clearly two different airlines with two different cultures, our common traits far outnumber our differences. We are all aviation professionals proud of our heritage, eager to serve the traveling public and hopeful for the future. While seniority integration will be a challenge for us and our employees, we will ensure that those issues are discussed and resolved in a fair and equitable manner. Throughout this process, as has always been the case, we will continue our commitment of open and honest communication with our employees. We are building a new future that will present far greater job security and growth opportunities than either airline would have achieved on its own, and we are doing so with the ability for all to share in the collective upside."

Equity Allocation

The $350 million of private equity commitments are based upon a total implied private full equity value of $850 million for the merged corporation. Of that $850 million valuation, 45 percent will be allocated to America West, 41 percent to the new equity and 14 percent to US Airways. This valuation results in an implied value of $6.12 per share for the publicly traded America West stock, taking into effect dilution from outstanding warrants and options and the anticipated treatment of convertible securities. The partners have agreed that up to $650 million of total equity can be raised including any proceeds from planned a rights offering. Any additional equity would dilute all participants pro rata. However, any additional equity raised above $350 million will not reduce the $6.12 per share of implied value for the publicly traded America West stock. The right to participate in a rights offering for up to $150 million in common shares of the merged companies is to be allocated 61.5 percent to the stakeholders of US Airways and 38.5 percent to the common stockholders of America West.

Approvals

Under the terms of the agreement, the merger is expected to occur subsequent to confirmation of US Airways' plan of reorganization and emergence from Chapter 11. Because the merger and related equity investments are subject to US Airways' pending Chapter 11 proceedings in the U.S. Bankruptcy Court for the Eastern District of Virginia in Alexandria, the transaction will also have to be approved by the U.S. Bankruptcy Court and will be subject to a competitive bidding process that will be proposed to the Court. The transaction, which has been approved by both company's boards of directors, is also subject to the approval of America West's shareholders.

Both airlines will file the necessary documents for review with the U.S. Department of Justice, the U.S. Department of Transportation and the Securities and Exchange Commission as well as secure other necessary regulatory approvals. In addition, both airlines hold loans with a federal guarantee from the Air Transportation Stabilization Board (ATSB), and the carriers are in joint negotiations with the ATSB on the treatment of those loans under the proposed merger.

US Airways Group, Inc. is being advised by Seabury Group LLC as restructuring advisor and financial advisor and the law firm of Arnold & Porter LLP; advisors for America West Holdings Corp. include Greenhill & Co., LLC as its principal financial advisor, Merrill Lynch & Co. as structuring advisor to certain financings, and the law firms of Skadden, Arps, Slate Meagher and Flom, LLP and Cooley, Godward LLP.

Media Call and Webcast Information. . .
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Old May 19, 05, 3:40 pm
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Conference call states that new airline to be based in Tempe and called US Airways.

Although they will operate on separate operating certificates for awhile, the America West name will disappear quickly after regulatory approval.
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Old May 19, 05, 3:41 pm
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Ive followed HP since day 1, flown them since 1984, have friends that currently work for them in PHX who equally love the brand and identity, and will be extremely sad to see the America West name vanish from the skies forever and be replaced with USAirways name.
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Old May 19, 05, 4:27 pm
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Originally Posted by ByrdluvsAWACO
It's being reported on CNBC right now.

Here's what's being reported about the deal...
  • merger supposed to take place on a stage-by-stage basis.
  • $1 billion in equity raised from Airbus($250million), Air Canada, Air Wisconsin, hedge funds, some rights offerings, and sale/lease back of aircraft.

What did I tell you guys? Time shall speak for itself. They are keeping the
US Airways name .
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Old May 19, 05, 4:48 pm
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It seems to me that America West has a better reputation overall than US Airways. Although US has better brand recognition across the country, I would keep the America West name and livery just because US Airways has already been dragged through the mud so much as it is.
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Old May 19, 05, 4:50 pm
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Originally Posted by sltlyamusd
It seems to me that America West has a better reputation overall than US Airways. Although US has better brand recognition across the country, I would keep the America West name and livery just because US Airways has already been dragged through the mud so much as it is.

Not to be mean, but is that revelant? It's already a fact that the name will be US Airways, not America West.
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Old May 19, 05, 5:18 pm
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Originally Posted by sltlyamusd
I would keep the America West name and livery just because US Airways has already been dragged through the mud so much as it is.
As a long time customer and multi year CP I agree with you. The name has become a BIG negative and needs to go.

Thanks for bailing the pig out guys. I hope it works out for all of us
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Old May 19, 05, 5:20 pm
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The merged airline plans to have focus cities in Boston, New York/LaGuardia, Washington, D.C., and Fort Lauderdale.
What the hell happened to LAX? Are they just giving up there?
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Old May 19, 05, 5:28 pm
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Originally Posted by ByrdluvsAWACO
What the hell happened to LAX? Are they just giving up there?
Yes!
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Old May 19, 05, 5:33 pm
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What about the club?

Is the partnership with Northwest now in jeporady?

Any thoughts?
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Old May 19, 05, 5:37 pm
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The only thing of interest is if it will be in Star Alliance or not.
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