America West Scraps Its Plans to Negotiate a Sale

The parent of America West Airlines said Monday that it scrapped plans to negotiate a sale of the nation’s ninth-largest airline to United Airlines or any other carrier.

America West Holdings Corp. didn’t specify one factor that led to its decision. But the Phoenix-based airline indicated that the buyout offers carried too many conditions, and that America West feared that regulatory and labor snags would jeopardize any deal.

Its board “terminated consideration” of a buyout after reviewing “the highly conditioned expressions of interest and of antitrust, regulatory and employee issues,” America West said.

“We are confident about the company’s future as an independent airline,” America West Chairman William Franke said in a prepared statement.

The only suitor to publicly confirm its interest in America West was United’s parent, UAL Corp., which saw the merger as a way to bolster United’s already strong presence in the West.

UAL had no immediate comment. But in a message to its employees Monday night, the airline said it was “disappointed” with the America West decision.

Delta Air Lines also took a look at America West but later dropped out. Continental Airlines, which has an 8% voting stake in America West and a marketing alliance with the carrier, also had a right of first refusal to acquire control of America West but never made a public offer.

“We value America West as a partner and look forward to continuing our relationship, but we decline to comment beyond that,” said Continental spokesman Ned Walker.

America West’s announcement came after financial markets closed, but investors earlier in the day seemed to sense that a buyout of America West was fraught with potential problems. On a day when airline stocks mostly rallied, America West’s stock fell $1.38 a share, to $21.38, in New York Stock Exchange composite trading.

Besides the antitrust concerns, there was uncertainty whether UAL’s unionized workers--who are the majority owners of UAL--would approve a buyout of America West. Any deal also needed the approval of Texas Pacific Group, a firm led by financier and Continental director David Bonderman that has a 49% voting stake in America West.

Then there was the question of whether a buyout would pass muster with U.S. antitrust regulators in light of United’s powerful presence in the West and Continental’s existing relationship with America West.

In any case, America West now must turn its attention to labor unrest. The airline and the Assn. of Flight Attendants are at an impasse in contract talks and are now in a 30-day “cooling-off” period that ends March 20. If a pact isn’t reached by then, the flight attendants are free to strike.