[Archive Home][Date Prev][Date Next][Index]
"Regulators OK US Air-America West deal"
Thursday, June 23, 2005
Regulators OK US Air-America West deal
Merger would be good for consumers, Justice Department says
WASHINGTON - U.S. anti-trust enforcers cleared the proposed merger between
bankrupt US Airways and America West Airlines, saying it would be good for
consumers, the Justice Department said on Thursday.
The agency said it concluded its 30-day review of the deal worth up to $1.5
billion and found that combining the carriers would not hurt competition.
The government declined to seek additional information from either company.
"The consolidation of America West and US Airways, which will create the
fifth-largest domestic carrier, will enable the merged airline to offer U.S.
consumers more and better service to more destinations throughout the
country," the Justice Department said in a statement.
US Airways hopes to emerge from court protection this fall and then begin
the process of merging with smaller America West. Combining the two airlines
could take more than two years, the companies have said. The new carrier
plans to operate under the US Airways flag.
The companies said in a joint statement they remain on track to secure
regulatory approval and finalize the transaction.
Industry analysts and consultants had envisioned little, if any, push back
from antitrust officials since there are few overlapping routes and US
Airways would likely fail if the deal fell through.
No. 7 US Airways mainly operates short-haul service in the East with hubs in
Philadelphia, Charlotte and a mini-hub in Pittsburgh. US Airways serves 179
cities and operates 3,400 daily departures. America West, the eighth-largest
domestic airline, has hubs in Phoenix and Las Vegas. It serves 96 cities and
operates 924 daily departures.
Competition concerns helped to sink US Airways last merger bid - with United
Airlines - in 2001.
Justice Department clearance is generally the toughest government hurdle in
a merger, but US Airways and America West have the added burden of having to
satisfy the federal board controlling $1 billion in government-backed loans
to the two carriers.
The Air Transportation Stabilization Board, set up to help struggling
airlines get private financing after the 2001 attacks, controls roughly $700
million in loan proceeds for US Airways and $300 million for America West.
"That's the next big hurdle they have to pass," said Robert Mann, a New
York-based consultant. "They obviously will be showing the same sorts of
documents that they've shown to investors to the ATSB for simply allowing
them to go forward."
US Airways moved forward in bankruptcy on other fronts on Thursday.
The federal judge in the Chapter 11 case approved a revised financing
agreement between the airline and its largest creditor, General Electric
Co., that allows the carrier to accelerate the reduction of its fleet and
receive additional breaks on aircraft lease and other payments.
Approval of the GE deal cleared the way for Republic Airways Holdings Inc.
to announce that it will proceed with plans to purchase or assume leases of
28 Brazilian-made Embraer 170s as well as gates and slots at New York
LaGuardia and Washington National airports from US Airways for $100 million.
Republic had the option to execute the transaction as part of a $125 million
equity investment in the bankrupt airline.
US Airways will lease back the slots and Republic will fly the new aircraft
on US Airways routes.
Judge Stephen Mitchell of the U.S. Bankruptcy Court for the Eastern District
of Virginia in Alexandria also approved an agreement that will allow US
Airways to continue to draw funds from the ATSB loans, the only source of
Access to cash, added liquidity, and new terms for aircraft financing are
crucial for maintaining operations and completing bankruptcy restructuring,
US Airways said. The company plans to file a new business plan with the
court by June 30.
Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums
Fair Use Notice
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of political, human rights, economic, democracy and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.html. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
If you have any queries regarding this issue, please Email us at email@example.com