Bids could challenge US Airways merger
In an interview Tuesday with the Observer, America West Chief Financial Officer Derek Kerr said the company believes its proposal will emerge on top.
He said he hasn't heard of companies assembling competing offers.
"We believe there could be somebody who could come out there and do something," Kerr said. "Any bid you would see would be more for pieces" of US Airways. Creditors, he said, would also be hard-pressed to sign onto another deal.
The key to submitting a
better bid for US Airways' assets, analysts say, is wooing US Airways creditors by making a sweeter offer. Typically, the bankruptcy process is designed to recoup as much money as possible for creditors. In this case, US Airways and America West have crafted a deal they say accomplishes that goal while preserving jobs and allowing creditors to continue supplying the airline.
Indeed, many of the biggest creditors have already signed on to the America West deal.
The ATSB will likely favor the America West offer, said Helane Becker, a transportation analyst and managing director of The Benchmark Co. With the two airlines planning to merge, the ATSB would have the opportunity to consolidate the two loans and restructure them in taxpayers' favor, she said.
"If I were the ATSB, I would be wildly thrilled," she said.
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USA320Pilot comments: The ATSB is comprised of the DOJ, DOT, and Federal Reserve. The DOJ and DOT will conduct the regulatory review.
In regard to Government/Regulatory reviews, US Airways posted the following Q&A on the Hub, its internal website:
Q. Does the Air Transportation Stabilization Board (ATSB) have to approve this merger?
A. Since both America West and US Airways have loans that are guaranteed by the federal government, we have kept the ATSB fully informed of our discussions. We will now be in negotiations with the ATSB on how the combined loans of the two companies will be treated after US Airways’ emergence from Chapter 11 and the transaction is completed.
Q. What other government approvals are required?
A. The U.S. Department of Justice will review the competitive nature of the transaction under the Hart-Scott-Rodino Act. The U.S. Department of Transportation has regulatory oversight as it relates to ownership, economic fitness, and international route authority, among other matters. And the U.S. Securities and Exchange Commission has oversight over the financial transaction, since both companies are publicly traded. We will be quickly filing the necessary paperwork and supporting documentation and pledged all available resources in order to ensure a speedy regulatory review. Because of the pro-competitive nature of the transaction and the prospect of spreading the many public benefits of a national, low-cost, low-fare airline to more cities, we are hopeful of prompt regulatory action.
Q. How is this deal any different from past merger attempts that regulators called anti-competitive?
A. Mergers and other transactions must be reviewed on their own merits, and not on the strengths or flaws of past transactions. This is a merger of the nation’s seventh and eighth largest airlines that creates the nation’s sixth largest airline as measured by available seat miles (ASMs). The important point here are the numerous benefits associated with this transaction for consumers and the communities we serve. This is a pro-competitive, pro-consumer transaction, with little overlap and the prospects of bringing enhanced competition and low fares to more cities.
Regards,
USA320Pilot
