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AmWest Halts United Merger Talks

The Associated Press, Feb 23, 1999 
 

By MICHELLE RUSHLO

TEMPE, Ariz. (AP) -- America West Holdings Corp. has terminated talks on possible buyouts by other carriers, the company's chairman announced Monday.

William Franke made the announcement to cheering workers at the company's headquarters.

UAL Corp., which controls the nation's largest airline, United, and America West had been talking for several weeks about a deal for the ninth-largest airline.

Franke said the board had ``unanimously concluded that America West shareholders, employees and the communities we serve will be better served by a growing, profitable and independent company.''

Franke added that ``we are confident about the company's future as an independent airline.''

He refused to acknowledge that United Airlines had made an offer to buy the company. But he told reporters later that conditions of the deal with a possible suitor -- including antitrust worries -- were viewed as ``difficult and unlikely.''

He would not elaborate.

In January, America West said it had been contacted by several airlines about a possible deal, but did not provide additional details. In a separate statement, UAL acknowledged it had approached America West.

Analysts have said a United-America West merger would have faced regulatory hurdles because of United's major presence in the Western U.S.

Michael Boyd, a Colorado-based airline consultant, said that a buyout by United would have been bad for travelers.

``United just needed (America West) for the airplanes,'' Boyd said. ``They need Phoenix like Bill Clinton needs another intern.''

The Elk Grove Village, Ill.-based United, which has refused to comment on a report last week that a cash offer was made to America West, said it was disappointed by America West's decision to end discussions, said spokeswoman Kristina Price.

Shares of America West had surged nearly 14 percent on Friday on a story in The Wall Street Journal that United had made a cash offer for America West and on expectations that a bidding war would erupt. On Monday, shares fell $1.37 1/2 to close at $21.37 1/2 in trading on the New York Stock Exchange.

America West's market value is about $1 billion, and Franke said recently that the biggest shareholder in the Phoenix-based carrier would agree to a buyout only if all the company's shares are sold.

Texas Pacific Group Inc. holds a 49 percent stake in America West. Continental, the nation's fifth-largest airline, owns 8.3 percent and has first rights to purchase TPG's shares for an America West acquisition.

Franke said America West did not solicit the recent proposal. But he added that the board was legally obligated to consider any offers, and would continue to do so.

``If one came along that made sense, of course, we would consider it. That's our obligation to our shareholders,'' he said.

America West still must resolve a sticky labor issue with its 2,400 flight attendants, who are in a 30-day countdown toward a strike. The flight attendants have been working without a contract since voting to unionize in 1994.

They can legally strike at midnight EST on March 20.