Ramon Lopez/WASHINGTON, DC
USAir REMAINS receptive to strategic alliances, up to and including a merger with another airline, according to Seth Schofield, the carrier's chairman and chief executive.
Speaking after the USAir Group's annual stockholders' meeting, Schofield estimated that the airline will have $1 billion in cash by the end of the year. After losing $3 billion during the last six years, USAir reported a $59 million net profit for the first nine months of this year and is expecting to stay in the black by the year end.
British Airways, a 25% shareholder in the company, is to decide whether to commit an additional $200 million to USAir in 1996, but Schofield says that the US carrier is cash-rich and the $200 million "...is not very important to us at this time", He says that USAir may use part of the cash reserve to pay off highest-cost debt.
Merger discussions with United Airlines have recently been terminated and Schofield says that USAir is not now in talks with any potential merger partner. He adds, however, that he "...fully expects that there will be other conversations about long-term strategic alternatives" and he believes that additional airline partnerships "up to and including acquisitions" are inevitable.
Schofield characterised the talks with United as "...very preliminary and part of the normal course of doing business". He says that a profitable USAir does not need a "fire sale". Furthermore, "...survival is not at issue. Survivability is not in my vocabulary when you have $1 billion," he declares.
Despite the cash reserves, USAir is still demanding $2.5 billion in labour concessions over the next five years, and the company remains willing to offer limited airline ownership in return for cost reductions. It plans to negotiate cost cuts in contract talks.
USAir would like to reduce further the number of aircraft types in its fleet, but its 31 McDonnell Douglas MD-80s will remain in service until a suitable replacement is found. No aircraft deliveries are scheduled in 1997 and 1998, but the airline might advance the delivery schedule in late 1997 if traffic continues to boom, according to Schofield.
USAir has resumed its search for a successor to Schofield. The airline's chairman put his planned retirement on hold for the duration of the United take-over talks. Schofield has agreed to delay his departure until "a suitable successor is found."
Meanwhile, disgruntled US investor Warren Buffett - who has seen his $358 million investment in USAir dwindle - has left the carrier's board.
Source: Flight International