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US Airways allowed to weigh rival bids (May not merge with America West)
Reuters ^ | May 31, 2005 | John Crawley

Posted on 06/01/2005 1:27:04 PM PDT by Righty_McRight

ALEXANDRIA, Va. (Reuters) - A federal judge on Tuesday allowed bankrupt US Airways Group Inc. (OTC BB:UAIRQ.OB - news) to consider any investment bids that would rival its proposed merger with America West Holdings Corp. (NYSE:AWA - news)

Judge Stephen Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia approved procedures that would give qualified investors 30 days to submit alternative plans to help US Airways emerge from bankruptcy protection.

"We want to shake the tree and see if there are any higher or better offers available," Brian Leitch, US Airways lead bankruptcy attorney, told the court.

So far, the merger proposal by America West and a group of investors is the only one that has been negotiated.

US Airways has also sought permission from Mitchell to extend its stay in bankruptcy to Oct. 31, if necessary. Prior to its merger announcement earlier this month, US Airways said it hoped to emerge from bankruptcy by the end of August.

The extra time would allow the Arlington, Virginia-based carrier to step out of court protection and finalize its merger within the same general time frame.

US Airways also won an extension of its right to develop an exit strategy without interference from creditors or other parties until June 23. It plans to have a final proposal in place by the end of the month -- when competing financing bids are due.

US Airways also defended its proposal of enhanced severance and bonus deals to try to retain top executives, mid-level managers and other salaried workers at least until US Airways and America West begin to merge or in the event the merger fails and US Airways tries to make it on its own or liquidates. Mitchell is expected to rule on the proposal on Wednesday.

Jerrold Glass, US Airways chief human resources officer, said the company has lost more than 400 executives and nonsalaried employees through attrition and downsizing since filing bankruptcy last September. US Airways is losing about two dozen managers and salaried workers a month.

"We have to provide the appropriate financial cushion for them to stay on our terms," Glass said of any new hires as well as managers and other workers who know or suspect they will lose their jobs in the merger.

The retention plan for nearly 2,000 people was initially opposed by US Airways' unions and the bankruptcy trustee in the case as too generous and too broad. US Airways agreed to scale back its original plan.

US Airways Chief Executive Bruce Lakefield's proposed severance would be cut by $2.4 million to $1.7 million, the company said. Lakefield is slated to be vice chairman of the combined airline. Retention plans for other top executives have also been cut.

It is not clear if rival investors would want to buy the airline's entire operation or portions of the business -- like airport slots or routes -- or seek to displace the five investors that have pledged nearly $500 million of new equity as part of the America West deal.

US Airways officials said no new bids are on the table.

Current investors would receive a break-up fee worth 3 percent of their stake if they are supplanted. Mitchell also approved a $15 million break-up fee if the merger fell through. The money would be paid by the party -- either US Airways or America West -- that backed out of the deal.

On May 19, US Airways and America West announced plans to combine forces to more aggressively compete with low-cost carriers. The new airline would become the sixth-largest domestic carrier in terms of passenger revenue and would use the US Airways name. It would also fly internationally.

Key investors include ACE Aviation Holdings Inc. (Toronto:ACERV.TO - news), Air Canada's parent; PAR Capital Management and Wellington Management Co LLP, both of Boston; Eastshore Aviation, the investment arm of regional carrier Air Wisconsin Airlines; and Virginia-based Peninsula Investment Partners LP.

General Electric Co. (NYSE:GE - news) will take back planes, and Airbus (EAD.PA) will provide a $250 million loan in exchange for being the A350 launch customer.


TOPICS: Business/Economy
KEYWORDS: a350; airbus; airlines; americawest; usairways

1 posted on 06/01/2005 1:27:06 PM PDT by Righty_McRight
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To: Righty_McRight

I have always had great respect for America West airlines and flew them whenever I could. I'd love to see their merger with You Mess Airways fall apart. Whatever it takes to see US Airways out of business after their handling of the Christmas baggage situation in Philadelphia... and all those union thugs that used innocent families as bargaining chips on Christmas... unemployed ASAP.

And good riddance to one of the most overpriced, unfriendly airlines that ever flew.


2 posted on 06/01/2005 1:35:18 PM PDT by AbeKrieger (Islam is the virus that causes al-Qaeda.)
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To: Righty_McRight

This is an ordinary course of action by the judge. This is a done deal. The worst that could happen is that someone may try to carve off a piece. GE Capital is a shark that no one wants to upset in this small tank of weak fish.

The merger is going to happen.


3 posted on 06/01/2005 1:35:59 PM PDT by JBR34 (I paid my taxes and I want them back)
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To: Aeronaut

aviation ping


4 posted on 06/01/2005 1:37:26 PM PDT by cardinal4 (Extraordinary Circumstances- proving PT Barnum was right..)
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To: JBR34
This is an ordinary course of action by the judge.

That's what I thought--this rival bid period is strictly a formality.

5 posted on 06/01/2005 1:42:17 PM PDT by NautiNurse ("I'd rather see someone go to work for a Republican campaign than sit on their butt."--Howard Dean)
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Comment #6 Removed by Moderator

To: cardinal4; Tijeras_Slim; FireTrack; Pukin Dog; citabria; B Knotts; kilowhskey; cyphergirl; ...

7 posted on 06/01/2005 2:22:28 PM PDT by Aeronaut (2 Chronicles 7:14.)
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To: AbeKrieger

USAir went downhill as soon as they finished off Piedmont Air in a merger.


8 posted on 06/01/2005 2:37:30 PM PDT by exDem from Miami
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To: AbeKrieger

Trust me, the only thing that will be USAirways after this whole merger gets ticking is the name.

AWA will be running the show, and the tired old union goons have no choice but accept it.


9 posted on 06/01/2005 3:08:00 PM PDT by Central Scrutiniser (Intelligent design is neither.)
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To: AbeKrieger
I have always had great respect for America West airlines and flew them whenever I could. I'd love to see their merger with You Mess Airways fall apart.

I don't doubt that you are correct from what I've heard about US Airways. However, many of us here in Phoenix, where America Worst is based, don't have much affection for A. Worst. I would rather walk than fly them, after a few bad experiences. I fly Southwest Airlines, and judging from the lines at Southwest's ticket counter as compared to America West's (they are in the same terminal at Sky Harbor in Phoenix), most travelers agree with me.

Having said that, I hope the merger does NOT happen. I think it's a big mistake for A West and a mega dumb move on their part.

Any chance of the anti-trust people in Washington nixing the deal?

10 posted on 06/01/2005 5:40:41 PM PDT by Babu
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To: exDem from Miami

I miss Piedmont. I think they were US Airways' best asset until they mutilated it into little more than a commuter airline.


11 posted on 06/01/2005 5:46:48 PM PDT by NASBWI
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To: AbeKrieger

It is sad because I was once a loyal customer and US Airways was my carrier of choice. But, they have fallen far.


12 posted on 06/01/2005 5:48:44 PM PDT by Redleg Duke (Don't let Terri's death be in vain!)
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To: NASBWI

I never flew Piedmont, but I never heard anyone say anything bad about them which is unusual in the airline business.


13 posted on 06/01/2005 5:49:14 PM PDT by Moonman62 (Federal creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it)
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To: Babu

"Any chance of the anti-trust people in Washington nixing the deal?"

Eh, I doubt it. Neither America West nor US Airways have any kind of monopoly in their respective zones, and merging them won't make them a serious threat to the other majors, who already serve most (if not all) the cities that the two combined carriers serve.


14 posted on 06/01/2005 5:49:58 PM PDT by NASBWI
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To: Moonman62

"I never flew Piedmont, but I never heard anyone say anything bad about them which is unusual in the airline business"

Ahh, Piedmont. You missed out, Moonman. They were definitely a good airline. When my folks and I would travel from the Bahamas to Maryland we would fly them (back in the 80s before the merger), and the service was excellent - meals on every flight, genuine smiles, cheerful attitudes.


15 posted on 06/01/2005 5:52:28 PM PDT by NASBWI
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