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US Airways scoffs at buyout offer

Tuesday, August 07, 2001

By Frank Reeves and Mark Belko, Post-Gazette Staff Writers

US Airways yesterday dismissed a New York-based holding company's bid to buy the airline for $1.81 billion in cash and stock.

In a terse statement, the airline said neither Global Airlines Corp. nor its chairman, Emil Bernard, have "established any meaningful credentials in support of their so-called proposal, nor has [Mr. Bernard] met with senior executives of US Airways. The company does not believe that it can give any credibility to this so-called proposal, and, accordingly has no plans to deal with it."

Over the weekend, Global Airlines, which tried unsuccessfully to buy Trans World Airlines earlier this year, announced its offer for US Airways. It included $10 in cash and $17 in Global nonvoting class B stock for each of US Airways' 67.1 million outstanding shares.

That compares with United Airlines' erstwhile bid for US Airways of $4.3 billion in cash -- or $60 a share -- plus the assumption of nearly $6 billion of debt and aircraft operating leases. US Airways and United called off their $11.6 billion merger agreement late last month in the face of the government's antitrust objections.

The failed merger has left the fate of US Airways in considerable doubt, and observers say the enigmatic Global Airlines appeared to be attempting to capitalize on the uncertainty.

William Lauer, chairman of Tarentum-based money manager Allegheny Capital Management Inc. and a US Airways investor, called Global's offer "an unnecessary distraction."

US Airways executives have said they opposed selling off the airline piecemeal. But they also have said US Airways, the nation's No. 6 carrier, will have to undergo major restructuring if it is to remain independent.

Management already has asked the company's pilots to give it the right to fly hundreds more regional jets than currently allowed under its contract with the union, and it's anticipated it will seek further concessions from the airline's other unionized workers.

Asked to comment on Global Airlines' offer, Allegheny County Chief Executive Jim Roddey said it was "certainly not an offer anyone would take seriously." But he said he wouldn't be surprised to see other takeover offers in coming weeks because of uncertainly over US Airways future due to the failed merger with United.

Roddey said he still wanted to know how US Airways executives intend to reorganize the airline as a stand-alone carrier. In particular, Roddey said, he hoped the airline would move forward on plans to expand and refurbish its maintenance center at Pittsburgh International Airport.

US Airways is taking delivery on hundreds of Airbus jets, many of which will require heavy maintenance in 2003. Roddey would like to see Pittsburgh get the bulk of that work.

United's promise to expand the maintenance center -- and thus ensure about 5,000 local jobs -- was a key factor in persuading many local political and business leaders to back the proposed merger.

US Airways closed yesterday at $17.75, up 87 cents, or 5 percent.

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