Airline Stocks Take Off on USAir Takeover Rumors
Airline stocks shot higher Monday amid rumors that USAir Group Inc. was the next target in a wave of industry takeovers.
Shares of Arlington, Va.-based USAir jumped $3.625 to close at $52.25 in active New York Stock Exchange trading while Delta Air Lines Inc. gained $1.75 to $81.75.
USAir and Atlanta-based Delta are two of the major domestic airlines that have not been recent subjects of takeover bids from investors outside the industry.
Northwest Airlines went private in July, United’s parent agreed to a management-pilot buyout last month, and Donald J. Trump, a New York real estate developer, last week bid $7.5 billion for the parent of American Airlines, the nation’s largest carrier.
Steinhardt Interest
Traders said there was speculation Monday, prompted by a published report, that Steinhardt Partners is buying additional shares of USAir and is seeking ways to increase its stock price.
In Monday’s editions of USA Today, columnist Dan Dorfman said he had learned that Steinhardt, a New York money management firm, has hired investment banker Wertheim Schroder & Co. to explore ways to enhance USAir’s stock price.
Although no takeover plans are in the works, Steinhardt has not ruled out a bid for USAir, Dorfman said.
Steinhardt already holds about 8.3% of USAir’s stock. Steinhardt officials were not available for comment.
A USAir spokesman declined comment, and Wertheim Schroder officials were unavailable.
Discount Fares
Shares of Ft. Worth-based AMR rose $1 to $104.75 in active trading, and UAL Corp., whose sale is pending to United’s management and employees, rose $1.25 to $284.25.
Separately, USAir Group said it is offering special discount fares of $158 round trip on flights of less than 500 miles and $198 on all others.
But the sale is limited. The airline said the fares may be purchased until Oct. 20, and travel must originate on or before Dec. 13 and be completed by Dec. 20. Various restrictions apply and seats are limited.
USAir also said weakening revenue and higher expenses will cause 1989 third- and fourth-quarter profit to be lower than in the corresponding 1988 periods. In addition, it reported that its September load factor, or percentage of seats filled, declined to 56.3% from 57.4% a year ago.
USAir said promotional fall fares that have been adopted by most carriers, and Hurricane Hugo, which disrupted operations at its Charlotte, N.C., hub and other airports, will cause the lower earnings.
