Only in America...Global Airlines has no operations and has ordered as many as 550 aircraft from Alliance Aircraft Corp., a company that hasn't produced any planes and doesn't yet have a factory. And Global chairman Emil Bernard is a man whom people in the industry say they know little about.... Top Financial News
08/05 21:15
Global Airlines Offers to Buy US Airways for $9.8 Bln (Update2)
By Alex Armitage
New York, Aug. 5 (Bloomberg) -- Global Airlines Corp., a New York-based holding company that failed in a bid to acquire Trans World Airlines Inc., offered to buy US Airways Group Inc. for $9.8 billion in cash, stock and assumed debt.
Global would pay $10 a share, or as much as $750 million, in cash and $17 a share in Global stock, spokesman John Scott said. The offer is 60 percent more than US Airways' Friday closing price. Global, led by Los Angeles investor Emil Bernard, also would assume $8 billion in debt.
``This is the financial equivalent of an Elvis sighting,'' said Michael Boyd, president of Evergreen, Colorado-based Boyd Group, an aviation-consulting company. ``To get $10 a share in cash plus $17 a share in wallpaper is not something US Airways' board will entertain.''
US Airways, the No. 6 U.S. airline, and UAL Corp.'s United Airlines called off a $12.3 billion merger last month because of opposition from U.S. antitrust enforcers. Analysts have said US Airways must reduce costs, find a major international partner and scale back flight and seat capacity amid a drop in demand.
Global, which has no operations, couldn't address those issues, Boyd said. The offer doesn't spell out any business plan, management team or long-term goals, he said.
`Very Seriously'
``US Airways' board is taking our offer seriously because they know who the bankers are who will be financing this transaction,'' Scott said. He wouldn't identify the banks. US Airways spokeswoman Sharon Taylor declined to comment.
The offer is valid until tomorrow midnight, though it may be extended, Scott said. If US Airways' board doesn't respond, Global plans to begin a tender offer to the Arlington, Virginia-based company's shareholders by Sept. 4, he said.
Global hopes to complete the purchase in the fourth quarter. US Airways would pay a $500 million breakup fee if an agreement was reached and it withdrew from the transaction.
US Airways had losses from operations of $166 million, or $2.47 a share, last year and $202 million, or $3.02, in this year's first half. The company's shares rose 8 cents to $16.88 on Friday. They've fallen 56 percent in the past year.
Last year, Global agreed to buy as many as 550 StarLiner series regional aircraft, valued at as much as $8.2 billion, from Alliance Aircraft Corp. Alliance plans to build the StarLiner factory next year and Global will receive the first shipment of planes in late 2003 or early 2004, Scott said,
The StarLiner jets will be incorporated into US Airway's Express unit, Scott said.
Global offered to buy bankrupt TWA in June 2000 for $381 million in stock, debt securities and cash. AMR Corp., owner of American Airlines, acquired TWA in April for $4.2 billion.
Bernard, Global's chairman, drew publicity in 1978 while leading a failed effort to buy the San Francisco Giants baseball team and move it to Washington, D.C.
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