US Airways raises $179M in stock for fuel
PHOENIX - US Airways Group Inc. sold nearly 22 million new shares yesterday to raise $179 million as it grapples with a projected $2 billion fuel bill this year.
PHOENIX - US Airways Group Inc. sold nearly 22 million new shares yesterday to raise $179 million as it grapples with a projected $2 billion fuel bill this year.
The deal includes 19 million shares sold to Merrill Lynch & Co., which is the sole book-running manager for the deal, and 2.85 million more to underwriters, Philadelphia's dominant airline carrier said.
It was not immediately clear whether Merrill was the buyer for the additional shares or whether there were other underwriters. US Airways spokesmen declined to comment on the offering and Merrill spokesmen were not immediately available.
Shares for the Tempe, Ariz.-based carrier dropped 25 cents, or 2.7 percent, to $8.86 after the New York Stock Exchange temporarily halted trading of the carrier's stock to distribute the new shares. Its stock stayed above the $8.50 per share that Merrill Lynch agreed to pay.
Shares were priced at $9.24, up $0.38 (4.29 percent) in late-morning trading.
Bob Mann, an independent airline analyst in Port Washington, N.Y., said the deal wouldn't have been possible earlier this year when surging oil prices helped force the carrier's stock to a 52-week low of $1.45 per share. Oil prices have since been on a monthlong slide, falling 99 cents yesterday to $115.01 on the New York Mercantile Exchange.
"For a company that 90 days ago was on many people's short list for going out of business, it really is a reversal of fortune," Mann said.
The airline said it planned to use the proceeds for general corporate uses. US Airways had 92.17 million shares outstanding before the new issue.
US Airways and other airlines have been scrambling to find ways to deal with a spike in jet fuel costs. The Air Transport Association, the main trade group for airlines, expects the industry to lose a combined $7 billion to $10 billion this year because of fuel costs.
Besides the new shares, US Airways officials have installed a menu of added travel fees, including charges for checked bags, soda and choice seats that are expected to raise as much as $500 million this year. The airline also plans to further cut seating capacity to keep fares high.
Associated Press Writer Bob Christie contributed to this story.