Money keeps pouring into US Airways' merger with America West Airlines -- and more cash could be on the way.
US Airways' lawyers told a bankruptcy judge Thursday that the airline has struck a deal with Tudor Investment Corp. to contribute $65 million to the merged carrier, bringing total pledges of outside equity to $565 million.
More money means stronger finances for the merged carrier, at a time when some other airlines are struggling to avoid bankruptcy filings. US Airways and America West have said they hope to close the deal about Oct. 1, subject to a variety of approvals from regulators, creditors and shareholders.
"It's extremely important to the employees of this airline to put us on firm financial footing for the first time in a number of years," said US Airways Chief Executive Bruce Lakefield, in an interview.
Since the airlines announced plans to merge in mid-May, they have pressed for more outside investment, Lakefield said. Perhaps as significantly, the company has been able to get a higher price for its shares. In the last two investment deals, with Tudor and Wellington Capital Management, investors have taken equity stakes at $16.50 a share. That's up from $15 a share paid by the original four investors, Ace Aviation Holdings, Par Investment Partners, Peninsula Investment Partners and Air Wisconsin Airlines.
"We've done a very good job of explaining the synergies arising out of this merger," Lakefield said. The airlines expect to save $600 million a year by combining fleets and routes, shedding 60 planes, moving headquarters to Arizona and eliminating overlapping jobs. Some analysts believe the savings figure is optimistic.
Tudor Investment Corp., based in Greenwich, Conn., is a fund manager that controls more than $11 billion.
The airlines are also close to announcing a deal with an unnamed credit-card provider, which would contribute at least $300 million for the right to offer cards linked to the merged airline's frequent flier program. Charlotte-based Bank of America provides cards for both US Airways and America West.
US Airways' largest hub is in Charlotte, home to about 5,300 of the airline's 24,000 workers. The merger would leave service from Charlotte mostly unchanged.
The airline filed for bankruptcy protection in September. Since then, it has wrung wage and benefit concessions from workers and struck financing deals with creditors, enabling it to attract a merger partner. Flying Standby
The head of US Airways' pilots union blasted the airline's management over the July Fourth weekend, likening company leaders to the tyrannical English monarchy ousted by American colonists.At issue is US Airways' plan to offer a profit-sharing program less lucrative than what the company proposed nearly a year ago, before filing for bankruptcy protection. The potential amount of money available for profit-sharing payouts is less than under the old proposal. The airline has said the changes were essential to attract investors, who are funding the proposed merger with America West Airlines.
Bill Pollock, chairman of the US Airways chapter of the Air Line Pilots Association, wrote that the Declaration of Independence "declared American intolerance to tyranny, control, greed (and) misapplication of power." Then shifting focus to "modern-day greed and lust for power," Pollock described the repeated sacrifices of US Airways pilots and the profit-sharing changes.
"This is a full betrayal of our partnership and represents greed in its purest form, and it must be stopped," wrote Pollock, who has been one of the biggest labor supporters of CEO Bruce Lakefield. "ALPA will use every weapon in our arsenal to put an end to this greed."
The airline could not be reached for comment Thursday.
Besides eliminating pretzels, US Airways is making other changes to on-board drink and food service.
Coming soon: a new wine list and the addition of rum specialty drinks on Caribbean flights. The return of hot meals to cross-country first class, which was previously announced, starts next month.
In the past week, five high-ranking current and former US Airways executives spoke with the Charlotte Observer about the airline's path in the last year and a half.
Decisions on the merger by a federal loan board, the Transportation Department and US Airways' bankruptcy judge could follow within weeks.