PSA Could Lose if USAir Deal Fizzles
Pacific Southwest Airlines could be forced to substantially alter the “course and scope of its business” if its proposed merger with USAir Group is not completed, according to documents recently filed by PSA with the Securities and Exchange Commission.
Additionally, PSA stands to lose as much as $5 million and four gates at airports in Los Angeles and San Francisco if USAir Group’s $400-million bid for the San Diego-based airline is derailed because PSA is unable to negotiate labor contract changes being demanded by USAir.
USAir and PSA have agreed that either airline can abandon the deal if it is not concluded by April 30. PSA has negotiated the labor contract changes with its pilots and two smaller unions, but last week it broke off negotiations with the Teamsters, a union representing about 3,800 PSA employees.
Could Terminate Flights
Failure to conclude the merger with USAir could force PSA to stop using one or more airports it now serves, and the airline could face a “lowering and restructuring of its costs,” according to the documents.
“We’re obviously in a position now where we have the two giants of the industry--United and American airlines--on top of our backs, and we have to develop some strategy that will adequately serve our shareholders and employees,” PSA spokesman Bill Hastings said Monday, referring to the increased competition from two of the nation’s largest airlines. United Airlines said recently that it is strenghtning its West Coast flight schedule, and American recently acquired PSA competitor AirCal.
Teamsters Union Local 2707 officer Marvin Griswold did not return telephone calls Monday for comment on the PSA filing with the SEC.
In the agreement signed in December, PSA granted USAir options to purchase PSA’s leases for two passenger gates at Los Angeles International Airport and two more gates at San Francisco International Airport. If the deal falls apart and USAir acquires the Los Angeles leases, PSA’s operations “will be adversely impacted unless (the airline) is able to make arrangements to share gates or obtain additional gates,” according to documents filed with the SEC.
“It would be difficult for us to replace those gates, but we might be able to share (space) with some other carriers,” Hastings said. PSA operates about 115 flights each day out of Los Angeles.
Costs Could Hit $5 Million
According to the December agreement, PSA also would be forced to pay USAir as much as $5 million to cover merger-related costs should the deal fall through.
In a related development on Monday, the Teamsters advised PSA that they would not present PSA’s final offer to a ratification vote by its members, Hastings said. PSA made the offer Thursday.
That decision was not expected to alter a demonstration being planned for this morning by a growing number of dissident Teamsters-represented reservations agents, flight attendants, mechanics and station personnel.
