Delta Ends Bid for Jet America; Likely Buyer Is Alaska Air
Alaska Air Group emerged Thursday as the apparent winner in a bidding war for Jet America Airlines when Delta Air Lines withdrew its offer for the Long Beach-based carrier.
Delta said it withdrew its $4.25-a-share offer because it was unable to restructure Jet America’s leases and loan obligations to its satisfaction. Delta, headquartered in Atlanta, said its action was not related to its proposed $860-million acquisition of Western Airlines.
“We’re delighted, obviously,” said Lou Cancelmi, a spokesman for Alaska Air in Seattle. “We wanted to acquire . . . (Jet America) all along, and this gives us an opportunity to do it.”
End of Contest
Jennifer Atzen, a spokeswoman for Jet America in Long Beach, said the airline had no comment on Delta’s move.
Delta’s announcement seemingly ends a contest for financially troubled Jet America that began Aug. 6, when Jet America agreed to be acquired by Alaska Air Group for $14.3 million, or $3.25 a share. However, on Aug. 18, Delta made a surprise $18.7-million, or $4.25-a-share, bid for Jet America. Alaska Air topped that bid last Friday by offering $19.9 million, or $4.50 a share.
“You’re never delighted (at) having to pay more than the initial offer, but you go into these situations fully cognizant that there may be competition,” Cancelmi said.
Analysts said both airlines were interested in acquiring Jet America’s landing slots at three airports--Long Beach, Burbank and Orange County’s John Wayne--where access has been restricted due to local opposition to airport noise. Jet America also has landing slots at O’Hare Airport in Chicago and at Washington National Airport.
Alaska Air said it wants Jet America in order to enlarge its presence in Southern California and also to acquire its aircraft. Jet America’s fleet consists of six McDonnell Douglas MD-80 jets. Alaska Air has said it would retain Jet America’s name and employees.
Alaska Air, which already owns 18% of Jet America, said it has reached agreements with Jet America’s lenders and lessors on restructuring those obligations. Alaska Air’s tender offer for Jet America shares expires Sept. 18.
Delta said it would return stock that had been tendered under its offer to shareholders.