US Airways gets buyout offer
Global Airlines Corp. announced Sunday that it will offer $1.8 billion - or $27 a share in cash and stock - for US Airways. Global, a privately held company, also said it would assume nearly $8 billion in US Airways debt.
Allegheny County Executive Jim Roddey said Global's offer may be too low for US Airways' stockholders.
Global's offer comes two weeks after US Airways and United Airlines agreed to terminate a proposed $11.6 billion merger deal rather than fight stiff opposition from the U.S. Justice Department.
Global wants to acquire all 67.1 million outstanding shares of US Airways for $10 in cash and another $17 in Global nonvoting class B stock, which would be registered and traded on the New York Stock Exchange under the symbol GAC.
'It does not sound like a price that would be acceptable to US Airways shareholders,' Roddey said.
Shares of US Airways stock were worth $16.88 when the New York Stock Exchange closed Friday.
Michael Boyd, president of The Boyd Group, an Evergreen, Colo.-based aviation consulting firm, said Global's offer falls short of US Airways' true worth.
'The company is worth $16 billion or $17 billion in hard cash. Not half in cash and half in wallpaper,' he said.
'The whole thing sounds like a high school investment class doing a term paper,' Boyd said.
'(Global's offer) is one more complicating factor in this whole saga of US Airways. Let's hope this is merely a distraction and not something we have to concern ourselves with,' Roddey said.
US Airways spokeswoman Sharon Taylor said the airlines has no comment on the offer.
'We'll just have to wait and see what the response of US Airways will be. I will try to reach the management of US Airways first thing (this) morning,' Roddey said.
US Airways, which dominates traffic at Pittsburgh International Airport, is the region's largest private employer with some 11,700 workers.
Roddey has been seeking a financial pledge from US Airways to build a much-needed aircraft maintenance facility at the airport to service the airline's growing fleet of European-made Airbus aircraft.
Roughly 4,800 mechanics and related workers service US Airways planes at Pittsburgh International. Those local jobs would be threatened if the airline does not build hangars here to service the larger aircraft.
'Obviously, we'll continue what we've been doing consistently, trying to do things that will assist US Airways, particularly in Pittsburgh, and focus on a new maintenance facility,' said county Manager Bob Webb.
Global's offer is valid until midnight tonight but company spokesman John Scott said it could be extended. He said that if US Airways' board of directors does not respond to the offer, Global will move forward with a tender offer to US Airways shareholders no later than Sept. 4.
'It's too early to tell if the offer will eventually change the structure of US Airways. We'll just have to wait and see on that,' Webb said.
'We don't know anything about what (Global's) plans might be, whether they plan to continue to operate a hub in Pittsburgh,' Roddey said.
'They may plan to break it (US Airways) up. At this point, that's pure speculation,' Roddey said.
Representatives of the various unions representing US Airways employees could not be reached for comment.
Global, which was organized in 1994 and hopes to get into the airlines business, is controlled by Los Angeles investor Emil Bernard who reportedly met with US Airways executives last month.
Last year, Global - which is not listed in the New York telephone directory - applied to the Federal Aviation Administration for certification as a commercial carrier.
As far as could be determined last night, Global currently has no flight operations - no aircraft, flight crews, routes or gate space at any airport.
Global tried to purchase Pam American Airways before the airlines declared bankruptcy. Pan Am was eventually brought out of bankruptcy by a group of investors from New Hampshire.
Global's offer to buy Trans World Airlines Inc. for $5 a share was dismissed by analysts as irrelevant.
TWA eventually was purchased by AMR Corp.'s American Airlines, the nation's largest air carrier.
The Justice Department ruled last month that the proposed mega-merger between United and US Airways - which would have formed the world's largest airlines - would 'reduce competition, raise fares and harm consumers.'
The Justice Department said the merger between United, the nation's second-largest carrier, and US Airways, the sixth-largest, would have created a monopoly or duopoly on nonstop service on over 30 routes and substantially limit competition on numerous others.
As part of the termination agreement, UAL Corp., the parent of United Airlines, will pay US Airways $50 million.
If US Airways accepts Global's proposal, Scott said the company expects no problems in obtaining federal approval and that the deal could be completed by the end of the year.
The terms of the proposed deal also call for Global to receive a $500 million termination fee from US Airways.
Airline analysts said US Airways needs a strong and profitable route system, reduced costs and scaled-back seat capacity, rather than a cash infusion, which is what Global would offer.
Global promised no layoffs, but said a hiring freeze would take effect. It also said the deal requires the resignations of US Airways' board, its chairman, Stephen Wolf, and its president and chief executive, Rakesh Gangwal.
Staff writer Jim Ritchie, The Associated Press and The Washington Post contributed to this report.