Delta Air Lines Launches Offer for Jet America
Delta Air Lines launched an $18.7-million tender offer for shares of Jet America Airlines on Monday, outbidding the $14.3-million agreement that Alaska Airlines signed with Jet America on Aug. 6.
Officials at Long Beach-based Jet America said they learned of Delta’s $4.25-per-share offer in newspaper advertisements Monday morning and were awaiting additional information. They would make no further comment.
Officials of Alaska Air Group, parent of Alaska Airlines, said they also were studying the Delta offer but declined to say whether they would increase their bid of $3.25 per share for Jet America’s 4.4 million outstanding shares.
Alaska Airlines, which has been consistently profitable in recent years, had hoped to increase its business in the continental U.S. as growth in Alaska slackens.
Jet America shares, trading on the American Stock Exchange, climbed 75 cents to $4 on Monday. Delta dropped 50 cents to $40.87 1/2.
Access to Airports
If Delta succeeds in acquiring Jet America, it stands to gain valuable access to three restricted Southern California airports--Long Beach, Burbank and John Wayne in Orange County. Service out of these smaller airports has been growing rapidly, but access has been limited due to local opposition to airport noise.
Jet America has six slots at Long Beach, where the Federal Aviation Administration is trying to force the city to significantly increase the number of flights, 15 slots at Chicago’s O’Hare and four at Washington National Airport. The airline also serves Detroit, Las Vegas, St. Louis and Dallas.
Delta, which has routes throughout the United States and overseas, currently operates out of Los Angeles International Airport and Ontario International Airport.
In addition to airport landing slots, Delta would pick up Jet America’s six MD-80 aircraft. Delta has orders and options for 80 of the aircraft but will not begin to receive them before the beginning of next year. McDonnell Douglas, the builder of the MD-80, said Monday that the jetliner is sold out until 1988.
Atlanta-based Delta made its offer through DeltaSub Inc., a wholly owned subsidiary. Delta has not been active in the wave of recent airline industry mergers, but it did take 20% interests in two small regional airlines, based in Cincinnati and Atlanta.
Both Alaska Air, based in Seattle, and Delta made their tender offers contingent on Jet America restructuring certain debt obligations for loans and leases.
