America West (NYSE:AWA)
Historical Stock Chart
From Jul 2019 to Jul 2024
America West Holdings Corporation and US Airways Group, Inc. to
Merge
* New airline to provide customers full-service offerings and consumer-friendly
pricing structure of a low-cost low-fare carrier
PHOENIX, May 19 /PRNewswire-FirstCall/ -- America West Holdings Corporation
(NYSE:AWA) and US Airways Group, Inc. (OTC:UAIRQ) (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
On Thursday, May 19, from 2:15 p.m. to 3:15 p.m. PDT (5:15 - 6:15 p.m. EDT),
America West and US Airways will host a media briefing via telephone conference
call. This media briefing will also be webcast live simultaneously on a
listen-only basis at the investor relations section of
http://www.americawest.com/ and http://www.usairways.com/. A replay of the
webcast will be archived and available for 30 days. To access the call, dial
913/981-4900 and enter pass code 8829743.
The audio playback of the conference call will be available through May 21,
2005. The numbers to call for the playback are 719/457-0820 or 888/203-1112
and the replay passcode is 8829743.
Press conference location and satellite coordinates
On Thursday, May 19, from 5 p.m. to 5:45 p.m. PDT (8 p.m. to 8:45 p.m. EDT),
the airlines will host an in-person press conference at America West Airlines'
Corporate Headquarters, 111 W. Rio Salado PKWT in Tempe, Ariz. in the Annex
Rooms, south side of the building.
The press conference will be available via telephone on a listen-only basis.
Please dial in approximately 15 to 20 minutes prior to the start of the call.
Operators will provide instructions on the format being used during the call.
The call may last up to 60 minutes including the question-and-answer period.
To access the call, dial 304/345-7506 and enter pass code 959620.
The call will also be webcast live on a listen-only basis at the investor
relations section of http://www.americawest.com/. The webcast will be archived
for one week.
The audio playback of the conference call will be available through May 26,
2005. The numbers to call for the playback is 402/970-2661 or 877/471-6581 and
the replay passcode is 759707.
The press conference will also be available live via satellite through the
following feed:
Thursday May 19 2005
4:45 p.m. - 5:45 p.m. PDT
Galaxy 11
KU - Band
Transponder 13
Uplink Freq: 14260 vertical
Downlink Freq: 11960 Horizontal
B-roll footage
The footage will be available with soundbites from Doug Parker and Bruce
Lakefield. The B-roll will also feature America West and US Airways aircraft
taxiing and taking off and will include air-to-air footage. The B-roll at 6:45
p.m. PDT and 12:30 a.m. PDT will include clips from the press conference. To
access the B-roll, use the coordinates below.
Thursday May 19, 2005
5 p.m. - 5:15 p.m. PDT
IA 5
Transponder 7
C-Band
Downlink: 3840 Vertical
Thursday May 19, 2005
6:45 p.m. - 7:00 p.m. PDT
IA 5
Transponder 7
C-Band
Downlink: 3840 Vertical
Friday May 20, 2005
12:30 a.m. - 12:45 a.m. PDT
IA 5
Transponder 7
C-Band
Downlink: 3840 Vertical
Preview and access this video on Pathfire DMG: 21814. Search within the PR
Newswire or MultiVu section by story ID number 21814 or by headline. For
technical assistance call Pathfire Customer Care at 1-888-345-0489 or e-mail .
Analyst Call and Webcast Information
On Friday, May 20, from 5:30 a.m. to 6:30 a.m. PDT (8:30 - 9:30 a.m. EDT),
America West will host a analyst briefing via a telephone conference call. This
analyst briefing will also be webcast live simultaneously on a listen-only
basis at the investor relations section of http://www.americawest.com/. A
replay of the webcast will be archived and available for 30 days. To access
the call, dial 913/981-4900 and enter pass code 4249724.
The audio playback of the conference call will be available through May 22,
2005. The numbers to call for the playback are 719/457-0820 or 888/203-1112
and the replay passcode is 4249724.
FORWARD-LOOKING STATEMENTS
Certain of the statements contained herein should be considered
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward looking statements may be
identified by words such as "may," "will," "expect," "intend," "anticipate,"
"believe," "estimate," "plan," "could," "should," and "continue" and similar
terms used in connection with statements regarding the companies' outlook,
expected fuel costs, the RASM environment, and the companies' respective
expected 2005 financial performance. Such statements include, but are not
limited to, statements about the benefits of the business combination
transaction involving America West Holdings Corporation ("America West") and US
Airways Group, Inc. ("US Airways" and, together with America West, the
"companies"), including future financial and operating results, the companies'
plans, objectives, expectations and intentions and other statements that are
not historical facts. Such statements are based upon the current beliefs and
expectations of America West and US Airways' management and are subject to
significant risks and uncertainties that could cause the companies' actual
results and financial position to differ materially from these statements. Such
risks and uncertainties include, but are not limited to, the following: the
ability of the companies to obtain and maintain any necessary financing for
operations and other purposes, whether debtor-in-possession financing, in the
case of US Airways, or other financing; the ability of the companies to
maintain adequate liquidity; the duration and extent of the current soft
economic conditions; the impact of global instability including the continuing
impact of the continued military presence in Iraq and Afghanistan and the
terrorist attacks of Sept. 11, 2001 and the potential impact of future
hostilities, terrorist attacks, infectious disease outbreaks or other global
events; changes in prevailing interest rates; the ability to attract and retain
qualified personnel; the ability of the companies to attract and retain
customers; the cyclical nature of the airline industry; competitive practices
in the industry, including significant fare restructuring activities by major
airlines; the impact of changes in fuel prices; economic conditions; labor
costs; security-related and insurance costs; weather conditions; government
legislation and regulation; relations with unionized employees generally and
the impact and outcome of the labor negotiations; US Airways ability to
continue as a going concern; US Airways' ability to obtain court approval with
respect to motions in the Chapter 11 proceedings prosecuted by it from time to
time; the ability of US Airways to develop, prosecute, confirm and consummate
one or more plans of reorganization with respect to the Chapter 11 proceedings;
risks associated with third parties seeking and obtaining court approval to
terminate or shorten the exclusivity period for US Airways to propose and
confirm one or more plans of reorganization, to appoint a Chapter 11 trustee or
to convert the cases to Chapter 7 cases; the ability of US Airways to obtain
and maintain normal terms with vendors and service providers; US Airways'
ability to maintain contracts that are critical to its operations; the
potential adverse impact of the Chapter 11 proceedings on US Airways' liquidity
or results of operations; the ability of US Airways to operate pursuant to the
terms of its financing facilities (particularly the financial covenants); the
ability of US Airways to fund and execute its Transformation Plan during the
Chapter 11 proceedings and in the context of a plan of reorganization and
thereafter; and other risks and uncertainties listed from time to time in the
companies' reports to the SEC. There may be other factors not identified above
of which the companies are not currently aware that may affect matters
discussed in the forward-looking statements, and may also cause actual results
to differ materially from those discussed. The companies assume no obligation
to publicly update any forward-looking statement to reflect actual results,
changes in assumptions or changes in other factors affecting such estimates
other than as required by law. Similarly, these and other factors, including
the terms of any reorganization plan of US Airways ultimately confirmed, can
affect the value of the US Airways' various prepetition liabilities, common
stock and/or other equity securities. Accordingly, the companies urge that the
appropriate caution be exercised with respect to existing and future
investments in any of these liabilities and/or securities. Additional factors
that may affect the future results of America West and US Airways are set forth
in their respective filings with the SEC, which are available at
http://www.shareholder.com/americawest/edgar.cfm and
http://investor.usairways.com/edgar.cfm, respectively.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction, a registration statement,
including a proxy statement of America West, and other materials will be filed
with the SEC. WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT AND PROXY
STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors will be able to obtain free copies of the registration statement and
proxy statement (when available) as well as other filed documents containing
information about US Airways and America West at http://www.sec.gov/, the SEC's
website. Free copies of America West's SEC filings are also available on
America West's website at http://www.shareholder.com/americawest/edgar.cfm, or
by request to Investor Relations, America West Airlines 111 West Rio Salado
Pkwy, Tempe, Arizona 85281. Free copies of US Airways' SEC filings are also
available on US Airways' website at http://investor.usairways.com/edgar.cfm or
by request to Investor Relations, US Airways Group, Inc., 2345 Crystal Drive,
Arlington, VA 22224.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there by any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of
1933, as amended.
PARTICIPANTS IN THE SOLICITATION
America West, US Airways and their respective executive officers and directors
may be deemed, under SEC rules, to be participants in the solicitation of
proxies from America West's stockholders with respect to the proposed
transaction. Information regarding the officers and directors of America West
is included in its definitive proxy statement for its 2005 Annual Meetings
filed with the SEC on April 15, 2005. Information regarding the officers and
directors of US Airways is included in its 2004 Annual Report filed with the
SEC on Form 10-K on March 2, 2005. More detailed information regarding the
identity of potential participants, and their interests in the solicitation,
will be set forth in the registration statement and proxy statement and other
materials to be filed with the SEC in connection with the proposed transaction.
(AWAG)
http://www.newscom.com/cgi-bin/prnh/20050223/LAW097LOGO
http://photoarchive.ap.org/
DATASOURCE: America West Holdings Corp.
CONTACT: America West Holdings Corp., +1-480-693-5729, or Hill and
Knowlton, +1-917-446-8065, for America West Holdings Corp.; or US Airways
Group, Inc., +1-703-872-5100
Web site: http://investor.usairways.com/edgar.cfm
Web site: http://www.shareholder.com/americawest/edgar.cfm
Web site: http://www.usairways.com/
Web site: http://www.americawest.com/