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Old 05-09-2005, 04:37 PM   #1  
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Default US Airways, AWA close to deal


Sacramento Business Journal - 2:02 PM PDT Monday
Report: US Airways, America West closer to deal

Negotiations on a merger of US Airways Group Inc. and America West Holdings Corp. have progressed to the point where potential investors are studying a proposed business plan, the Wall Street Journal reported Monday.

According to the Journal, one plan foresees the combined airline operating under the US Airways brand and focusing attention on Midwestern markets while introducing flights to Hawaii.

Bankrupt US Airways, the nation's No. 7 carrier in terms of traffic, and America West, which ranks eighth, confirmed last month they were discussing a merger. Arizona-based America West is the No. 3 airline at Sacramento International Airport by passenger volume; US Airways does not serve this market, but a combination of the two carriers could open service from here to additional destinations, particularly in the eastern United States.

US Airways spokesman David Castelveter confirmed the airline was negotiating with America West, but declined comment on the specifics of the Wall Street Journal article.

The Journal said the sides are hoping to complete a deal before America West's annual meeting May 17.

The deal would need new equity investors to help fund Virginia-based US Airways' exit from Chapter 11 bankruptcy protection, the newspaper reported. The paper quoted people familiar with the matter as saying the goal is $500 million in new cash, but a merger agreement could come with just $375 million of initial equity attached.

US Airways (OTCBB:UAIRQ) has said it hopes to emerge from bankruptcy this summer.
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