Deal To Be Financed With $1.5 Billion In New Money
REAL TIME NEWS 1830 EDT -- Bankrupt US Airways and
Arizona-based America West Thursday announced plans to wed, a
marriage that would save the Arlington, VA-based airline from
bankruptcy and give America West access to coveted East Coast
The deal still has to be approved by regulators and a Northern
Virginia bankruptcy court.
It's the first major merger in the airline business since
American Airlines gobbled up ailing TWA four years ago and is seen
as one of several corporate marriages between carriers still
smarting from the 9/11 attacks and a huge jump in the cost of
The new airline would be America's
sixth-largest, with combined assets of approximately $10
While the new airline will carry the name US Airways, it will be
headed by America West chief Doug Parker and will be based in the
Phoenix suburb of Tempe, AZ, according to a joint statement.
Air Canada, Wisconsin Air and GE are all partners in the merger,
vowing to contribute $1.5 billion in money to capitalize the
But will it work? Parker says it will.
"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," he said in a joint statement released after two
days of final negotiations in Tempe.
"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," US Airways chief Bruce Lakefield said in the
statement. "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."
But there was no immediate word on the fate of thousands of
employees working for both companies.
"Meat on the butcher block," Machinists union leader Bill Wise
told ANN shortly before the merger was announced. "That's a good
way to put it." Wise said union leaders were told nothing of the
merger talks until news of the negotiations reached the media. He
said he was shocked to learn that the negotiations had been
conducted in secret for 14 months.
Wise, a mechanic based in Charlotte, NC, said he was most
concerned about seniority in a blended system. He was also worried
about whether heavy maintenance for the new company's combined
fleet would be handled by outside contractors rather than airline