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American may bid for US Air shuttle
Slots at East Coast airports could be sold by struggling carrier
11:08 PM CST on Thursday, January 8, 2004
By ERIC TORBENSON / The Dallas Morning News
If US Airways Group Inc.'s East Coast shuttle is up for sale, American Airlines Inc. could be a likely bidder.
"American would make the most out of the shuttle of any airline," said Ray Neidl, an analyst who closely follows the airline industry at Blaylock & Partners, a New York-based investment firm. "It would tie in better with American's network."
Speculation about the US Airways shuttle grew Thursday following media reports that the carrier needs to sell its assets to raise cash. Among the routes that could be sold are shuttle operations between New York, Boston and Washington, the reports said.
The flights cater to business travelers, considered American's bread-and-butter market. Increasingly, the world's largest carrier is finding its crucial East Coast franchise under attack by low-cost discounters such as JetBlue Airways Corp.
American will always evaluate "opportunities that come up," said spokesman Roger Frizzell. He wouldn't comment on the carrier's interest in US Airways' shuttle.
US Airways declined comment Thursday on the reports, which appeared first in The New York Times and were later confirmed by the Reuters news service.
The carrier, based in Arlington, Va., emerged from bankruptcy protection last year but faces an onslaught of discount competition. In May, Dallas-based Southwest Airlines Co. will start service to Philadelphia, US Airways' most profitable city.
US Airways spokesman David Castelveter wouldn't say whether its shuttle operation is profitable.
Fort Worth-based American has sought the shuttle operation before, bidding $300 million for it in 1997.
But US Airways, which then owned a 47 percent stake in the shuttle, bought out the entire operation from a consortium of banks.
American won a $10 million fee in the bidding war.
An opportunity to own the shuttle arose again in 2001 when United Airlines Inc. tried to merge with US Airways. To appease antitrust regulators, United agreed to sell American partial ownership of the shuttle service.
That deal fell apart in July 2001, keeping US Airways in the shuttle business.
The near-hourly flights between the three key business cities have been profitable in the past, but there's plenty of competition these days for those fliers.
Delta Air Lines Inc. has its own shuttle operations, and American parent AMR Corp. began flying regional jets in a shuttle operation in 2002 with its wholly owned American Eagle arm. American officials have said they're pleased with early results.
Declining business travel and alternatives such as trains or driving have dented many short-haul business air routes.
Prospects for a deal between American and US Airways will largely hinge on price, Mr. Neidl said, noting that no carrier is flush with cash today.
American has improved its cash balance in the last year, and while it has $3 billion in the bank, it's struggling to pay off $22 billion in overall debt.
Other airlines would probably bid for the shuttle assets, Mr. Neidl said, even though "there's more than enough capacity on the shuttle routes now."
At least one American union likes the idea of a deal with US Airways.
"We would welcome any new flying opportunities," said George Price, a spokesman for the Association of Professional Flight Attendants, which has 5,700 members on furlough who would welcome the chance to come back to work.
The reports Thursday suggested US Airways wouldn't sell aircraft or employees, but would part with landing slots at congested facilities such as New York's LaGuardia Airport and Washington's Reagan National Airport.
American has 28 MD-80s in storage that it's preparing to put back into service as early as the middle of this year, according to a planning report the carrier presented to its unions in October.
American plans about 6 percent more capacity to its schedule this year. Much of that growth will come at its major hubs, Chicago's O'Hare International Airport and Dallas/Fort Worth International Airport.
Slots at East Coast airports could be sold by struggling carrier
11:08 PM CST on Thursday, January 8, 2004
By ERIC TORBENSON / The Dallas Morning News
If US Airways Group Inc.'s East Coast shuttle is up for sale, American Airlines Inc. could be a likely bidder.
"American would make the most out of the shuttle of any airline," said Ray Neidl, an analyst who closely follows the airline industry at Blaylock & Partners, a New York-based investment firm. "It would tie in better with American's network."
Speculation about the US Airways shuttle grew Thursday following media reports that the carrier needs to sell its assets to raise cash. Among the routes that could be sold are shuttle operations between New York, Boston and Washington, the reports said.
The flights cater to business travelers, considered American's bread-and-butter market. Increasingly, the world's largest carrier is finding its crucial East Coast franchise under attack by low-cost discounters such as JetBlue Airways Corp.
American will always evaluate "opportunities that come up," said spokesman Roger Frizzell. He wouldn't comment on the carrier's interest in US Airways' shuttle.
US Airways declined comment Thursday on the reports, which appeared first in The New York Times and were later confirmed by the Reuters news service.
The carrier, based in Arlington, Va., emerged from bankruptcy protection last year but faces an onslaught of discount competition. In May, Dallas-based Southwest Airlines Co. will start service to Philadelphia, US Airways' most profitable city.
US Airways spokesman David Castelveter wouldn't say whether its shuttle operation is profitable.
Fort Worth-based American has sought the shuttle operation before, bidding $300 million for it in 1997.
But US Airways, which then owned a 47 percent stake in the shuttle, bought out the entire operation from a consortium of banks.
American won a $10 million fee in the bidding war.
An opportunity to own the shuttle arose again in 2001 when United Airlines Inc. tried to merge with US Airways. To appease antitrust regulators, United agreed to sell American partial ownership of the shuttle service.
That deal fell apart in July 2001, keeping US Airways in the shuttle business.
The near-hourly flights between the three key business cities have been profitable in the past, but there's plenty of competition these days for those fliers.
Delta Air Lines Inc. has its own shuttle operations, and American parent AMR Corp. began flying regional jets in a shuttle operation in 2002 with its wholly owned American Eagle arm. American officials have said they're pleased with early results.
Declining business travel and alternatives such as trains or driving have dented many short-haul business air routes.
Prospects for a deal between American and US Airways will largely hinge on price, Mr. Neidl said, noting that no carrier is flush with cash today.
American has improved its cash balance in the last year, and while it has $3 billion in the bank, it's struggling to pay off $22 billion in overall debt.
Other airlines would probably bid for the shuttle assets, Mr. Neidl said, even though "there's more than enough capacity on the shuttle routes now."
At least one American union likes the idea of a deal with US Airways.
"We would welcome any new flying opportunities," said George Price, a spokesman for the Association of Professional Flight Attendants, which has 5,700 members on furlough who would welcome the chance to come back to work.
The reports Thursday suggested US Airways wouldn't sell aircraft or employees, but would part with landing slots at congested facilities such as New York's LaGuardia Airport and Washington's Reagan National Airport.
American has 28 MD-80s in storage that it's preparing to put back into service as early as the middle of this year, according to a planning report the carrier presented to its unions in October.
American plans about 6 percent more capacity to its schedule this year. Much of that growth will come at its major hubs, Chicago's O'Hare International Airport and Dallas/Fort Worth International Airport.
