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Report: USAir to buy jets
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October 14, 1996: 7:50 a.m. ET
Airline reportedly talking to Boeing, others about $5 billion purchase
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NEW YORK (CNNfn) - USAir Group Inc. is reportedly in talks with leading aircraft makers to purchase up to 120 new jetliners for about $5 billion in a bid to cut costs and keep pace with more efficient competitors.
The Wall Street Journal reported Monday that USAir's new chairman and chief executive, Stephen M. Wolf, wants to upgrade the airline's mismatched fleet with a more uniform fleet of narrow-bodied jetliners. Since taking the helm of the sixth-largest U.S. air carrier in January, Wolf has complained publicly that the fleet is too complex and inefficient.
The newspaper said Boeing Co. appears to have the edge in negotiations, but added that European consortium Airbus Industrie and McDonnell Douglas Corp. are also being given serious consideration.
The airline is expected to make a deal with one or more of the companies for as many as 100 narrow-bodied jetliners and 20 long-range jets. A final decision could hinge on which company offers the best deal to remarket USAir trade-ins and what kind of financing plan is reached.
Following the 1980s acquisitions of Piedmont Airlines and PSA Airlines, USAir has controlled a mixed batch of nine types of aircraft. Such a hodgepodge pool raises the costs for training pilots and maintaining aircraft. It also prevents the airline from developing a more flexible schedule that can substitute aircraft.
To simplify its fleet, the newspaper said Wolf is likely to purchase four types of aircraft that will allow it to compete better on the East Coast with low-cost rivals ValuJet Airlines, Southwest Airlines and Delta Airline's Express.
The airline is looking at several types of Boeing 737s, Airbus A320s and McDonnell Douglas MD-95s to replace a variety of DC-9s, Fokkers and old 737s. It is also considering the purchase of long-range Boeing 777s and Airbus A33s that would allow it to expand service to more European cities.
Paying for the deal should not be a tremendous stretch for the airline. USAir is believed to have $1.3 billion in cash on hand and a strong financial position to help it qualify for a line of credit necessary to purchase 120 new jetliners.
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