USAir plans stock buyback Carrier also will retire debt, redeem preferred shares
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February 04, 1998|By Suzanne Wooton | Suzanne Wooton,SUN STAFF
In a sweeping plan aimed at increasing the value of its stock, US Airways Group Inc. said yesterday that it will repurchase up to $500 million in common stock, retire a sizable amount of debt and redeem the last of its outstanding preferred shares.
"With approximately $2 billion in cash on hand, we are now in a position to take steps to underscore our focus on both shareholder value and improving our balance sheet," US Airways Chairman Stephen M. Wolf said yesterday.
After years of devastating losses, the airline, along with the rest of the industry, has enjoyed a resurgence during the past two years and is now posting record profits. In the fourth quarter of 1997, US Airways, the dominant carrier at Baltimore-Washington International Airport, earned $137.5 million, quintuple the amount the same period a year earlier.
In addition, the airline's stock has tripled -- climbing from $20 a share a year ago to $62.125 yesterday on the New York Stock Exchange.
The company said yesterday it will repurchase the stock on the open market and through privately negotiated transactions. In addition, it will redeem $358 million in Series H convertible preferred stock currently held by affiliates of Berkshire Hathaway Inc., which is controlled by billionaire investor Warren Buffett.
The stock, which must be redeemed on Aug. 7, 1999, is convertible into 9.24 million shares of the airline's common stock at a conversion price of $38.74 per share -- $216 million below what the stock would have cost at yesterday's close.
"Warren Buffett has been a respected shareholder for a number of years -- and we are pleased that he has received appropriate value for his patience," Wolf said yesterday.
In a statement yesterday, Buffett, praised US Airways.
"My hat is off to Steve Wolf and his management team," said the Berkshire chairman and chief executive. "Few airlines -- indeed, few companies -- are better managed than US Airways is today, with an eye both to the long-term competitive strength of the enterprise and the well-being of the shareholder. After a dismaying period, we are very pleased with our investment in US Airways."
The airline's common stock was trading for about $50 a share when Buffett bought the special class of preferred shares in 1989 and dropped to as low as $4 a share in 1994. In 1995 a disgruntled Buffett resigned from the floundering airline's board and Berkshire Hathaway wrote off $268.5 million of its $358 million investment in the airline.
The Arlington, Va.-based carrier also announced yesterday that it would retire $379.2 million in debt obligations. When the process is completed, Wolf said, the airline will have reduced its debt and preferred stock since May 1997 by $1.35 billion and reduced its annual dividend and interest expense by about $115.9 million.
The moves are expected to result in a cash stockpile topping $1 billion at the end of 1998, the company said.
US Airways operates about 75 jet flights a day at BWI, moving about 45 percent of the airport's 32,000 daily passengers. While the airline has substantially trimmed its service in recent years, it is now poised to launch its new discount service to compete with Southwest Airlines and the growing number of low-fare operations on the East Coast.
The airline is expected to announce details about the operation today.
BWI is expected to play a pivotal role in the low-fare service, which will begin in spring.
Pub Date: 2/04/98
Transportation
February 04, 1998|By Suzanne Wooton | Suzanne Wooton,SUN STAFF
In a sweeping plan aimed at increasing the value of its stock, US Airways Group Inc. said yesterday that it will repurchase up to $500 million in common stock, retire a sizable amount of debt and redeem the last of its outstanding preferred shares.
"With approximately $2 billion in cash on hand, we are now in a position to take steps to underscore our focus on both shareholder value and improving our balance sheet," US Airways Chairman Stephen M. Wolf said yesterday.
After years of devastating losses, the airline, along with the rest of the industry, has enjoyed a resurgence during the past two years and is now posting record profits. In the fourth quarter of 1997, US Airways, the dominant carrier at Baltimore-Washington International Airport, earned $137.5 million, quintuple the amount the same period a year earlier.
In addition, the airline's stock has tripled -- climbing from $20 a share a year ago to $62.125 yesterday on the New York Stock Exchange.
The company said yesterday it will repurchase the stock on the open market and through privately negotiated transactions. In addition, it will redeem $358 million in Series H convertible preferred stock currently held by affiliates of Berkshire Hathaway Inc., which is controlled by billionaire investor Warren Buffett.
The stock, which must be redeemed on Aug. 7, 1999, is convertible into 9.24 million shares of the airline's common stock at a conversion price of $38.74 per share -- $216 million below what the stock would have cost at yesterday's close.
"Warren Buffett has been a respected shareholder for a number of years -- and we are pleased that he has received appropriate value for his patience," Wolf said yesterday.
In a statement yesterday, Buffett, praised US Airways.
"My hat is off to Steve Wolf and his management team," said the Berkshire chairman and chief executive. "Few airlines -- indeed, few companies -- are better managed than US Airways is today, with an eye both to the long-term competitive strength of the enterprise and the well-being of the shareholder. After a dismaying period, we are very pleased with our investment in US Airways."
The airline's common stock was trading for about $50 a share when Buffett bought the special class of preferred shares in 1989 and dropped to as low as $4 a share in 1994. In 1995 a disgruntled Buffett resigned from the floundering airline's board and Berkshire Hathaway wrote off $268.5 million of its $358 million investment in the airline.
The Arlington, Va.-based carrier also announced yesterday that it would retire $379.2 million in debt obligations. When the process is completed, Wolf said, the airline will have reduced its debt and preferred stock since May 1997 by $1.35 billion and reduced its annual dividend and interest expense by about $115.9 million.
The moves are expected to result in a cash stockpile topping $1 billion at the end of 1998, the company said.
US Airways operates about 75 jet flights a day at BWI, moving about 45 percent of the airport's 32,000 daily passengers. While the airline has substantially trimmed its service in recent years, it is now poised to launch its new discount service to compete with Southwest Airlines and the growing number of low-fare operations on the East Coast.
The airline is expected to announce details about the operation today.
BWI is expected to play a pivotal role in the low-fare service, which will begin in spring.
Pub Date: 2/04/98
How truly sad it must be for anything at all remotely approaching a "man" to live "his" life fully dependent on some arbitrator(s) or lawyers whims, so's to even imagine "him"self to have any actual "worth" at all.....
