1 Billion In Financing For Merger

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Dec 27, 2003
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"US Airways close to $1bn in new financing
By Caroline Daniel in Chicago
Published: May 15 2005 20:08 | Last updated: May 15 2005 20:08

America West and US Airways are finalising details of a wide-ranging financing package that could provide more than $1bn in new financing for their proposed merger, including up to $500m in equity, helping to address fears about their weak balance sheets.

Details could emerge as early as this week. The two airlines are seeking three or four equity investors who would put in $125m each. The preliminary list includes Air Canada, Par Capital, a leading financial investor in America West, and Air Wisconsin, a regional partner, according to several people involved in the talks."
 
As I said before, you will be stunned with the amount of investment, which could be much higher than $1 billion.

Here’s another article on the subject by Dow Jones Newswires:

US Airways, America West Hope to Announce Merger

See Story

(subscription service)

Regards,

USA320Pilot
 
US Airways, Amer West Hope To Announce Merger

By Susan Carey

Of THE WALL STREET JOURNAL

NEW YORK (Dow Jones) - US Airways Group Inc. (UAIRQ) and America West Holdings Corp. (AWA) hope to announce a merger later this week and are in advanced negotiations with potential equity investors to raise as much as $400 million, according to people close to the situation.

The two carriers also are closing in on a $250 million loan from Airbus (ABI.YY) in return for placing an order for about 20 of the jetliner producer's new A350 model, people close to the situation said. An order would give Airbus its first North American customer for the A350, which is intended to compete with rival Boeing Co.'s (BA) new 787 Dreamliner.

Negotiations with stock investors include Air Canada (ACNA.YY) and two hedge funds, according to people familiar with the talks. The two airlines have been hard at work for weeks on a deal that essentially would offer a well-capitalized merger as US Airways' bankruptcy-court reorganization plan.

A combination of the nation's seventh- and eighth-largest airlines in terms of traffic would stitch together US Airways' East Coast operations and flights to Europe and the Caribbean with America West Airlines' flights in the Western U.S. It would enable the two, under the US Airways brand, to launch flights to Hawaii and better compete for traffic in the Midwest. The two companies, which acknowledged the merger talks last month, also hope to leverage America West's low costs as US Airways continues to bring its expenses down in its second Chapter 11.

The potential deal comes as other carriers struggle to cut costs while under bankruptcy protection. In its first bankruptcy case, US Airways terminated its pilots' defined benefit pension plan. Under its current Chapter 11 filing, the company terminated its remaining employee pension plans, transferring their assets and liabilities to the federal Pension Benefit Guaranty Corp. Last week, UAL Corp.'s (UALAW) United Airlines also won permission to terminate its plans, paving the way for the largest pension default in U.S. corporate history.

The goal of US Airways and America West is to raise $500 million in new equity, with $375 million to $400 million in investments from specific companies topped up by the proceeds of a possible rights offering that could be underwritten by a major financial institution, said people familiar with the matter. "The business plan has been compelling enough to attract a wide range of interest from investors and partners," said a person with knowledge of the deal.

Air Canada parent ACE Aviation Holdings Inc. is in discussions about investing between $100 million and $150 million in equity, said people familiar with the matter. A spokeswoman for the Montreal-based carrier said it doesn't comment on rumors. People close to the situation said Air Canada's interest is driven by potential business synergies, such as winning maintenance work from the combined airline and building stronger relationships with other members of the global Star Alliance marketing group, which include US Airways and United Airlines.

Air Canada emerged from bankruptcy-court protection last September and is in much improved financial shape.

Hedge fund PAR Capital Management Inc. and a second hedge fund that also has invested in America West together are in advanced negotiations to provide $125 million of equity. Boston-based PAR at one point owned 15% of America West, but its stake was down to 1.7% at the end of 2004. The firm has invested in other airlines in the past. The identity of PAR's partner couldn't be learned.

The $375 million to $400 million the carriers hope to raise includes $125 million already invested by Air Wisconsin Airways Corp., a closely held regional airline.

Hedge fund Wexford Capital LLC isn't expected to exercise its option to invest $125 million when US Airways steps out of Chapter 11, because the other potential investors have offered more attractive terms, said one person familiar with the matter. But Wexford, which controls regional airline Republic Airways Holdings Inc., is likely to do a smaller deal that would top up US Airways' cash.

Airbus is the more surprising new source of additional cash. Under discussion is a $250 million loan and renegotiation of prices and delivery dates of the 63 Airbus planes the two carriers already have on firm order with the European manufacturer, said people familiar with the situation. The merged carrier also may agree to buy about 20 A350 widebody jets for delivery soon after the new airplane starts flying in 2010-2011. The planes would be powered by engine built by General Electric Co. (GE).

Airbus, owned by European Aeronautic Defence & Space Co. and Britain's BAE Systems PLC, hopes to attract launch orders for 50 airplanes by next month's Paris Air Show but recently has lost three high-profile sales campaigns to Boeing.

GE, the largest creditor to America West and US Airways, is finalizing its own financing deal with the two, said people with knowledge of the matter. The arrangement would reduce GE's exposure by $1 billion by cutting off most regional-jet financing and taking back about 25 more leased airplanes than the 35 it has said it will retrieve from US Airways.

GE has been helping US Airways stay aloft in its second visit to bankruptcy-court protection by offering a complex leasing and financial aid package, and has the right to demand that US Airways file a plan of reorganization by a certain date. The current idea is to file that plan with the court by the end of May or early June, and for US Airways to step out of Chapter 11 and consummate the merger by late summer or early fall, said people familiar with the timing. A spokesman for GE said it is talking to US Airways, but declined further comment.
 
Moderators, I thought you don't let posters copy and paste a whole article?
 
As I said before, there are multiple investors involved in the talks, the financing will be stunning and could reach $1.5 billion, and the company will try to complete the transactions by September.

Regards,

USA320Pilot
 
From the Article:

GE, the largest creditor to America West and US Airways, is finalizing its own financing deal with the two, said people with knowledge of the matter. The arrangement would reduce GE's exposure by $1 billion by cutting off most regional-jet financing and taking back about 25 more leased airplanes than the 35 it has said it will retrieve from US Airways.

Does this mean no more RJs for the WO carriers?
 
USA320Pilot said:
As I said before, there are multiple investors involved in the talks, the financing will be stunning and could reach $1.5 billion, and the company will try to complete the transactions by September.

Regards,

USA320Pilot
[post="269728"][/post]​
Click to expand...
i bet awa buys us,dumps heavy maintenance,the name lives on and everyone lives happily everafter.....
 
... and the new A350's are powered by GE engines. Doesn't anyone see that this type of deal goes WELL beyond the normal... :)
 
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