To be clear, the US Airways and AmericaWest “merger” is a shot gun wedding. The grouping of these airlines was not born from competitive scheming by either. The combination of two struggling carriers is at the behest of aircraft lessor, General Electric. GE’s capital risk exposure is minimized by consolidation. Collapse averted, GE will take back a much smaller, and manageable percentage for re-marketing to Europe and Asia. The entire industry is on a very short leash. The lenders are calling the shots.

Once proud mainline carrier, and in its second bankruptcy in so many years, US Airways has exhausted its ability to attract capital. In a last gasp it has secured financing from Wexford LLC and the Eastshore Group. These are corporate shell names for regional airlines, Chautauqua and Air Wisconsin which have each ponied up 125 million. One would hope that these two have first dibs on assets because their gamble could end up being only a noble contribution to US Air’s struggle. At their current rate of burn, and even though that’s a lot of dough, the 250 million equity commitment is a mere donation. Not likely that these regional carriers are buying their jobs just to hang on to feeder contracts. The evolution of the regional airline industry is amazing as they transform and influence more than anyone would have imagined. It wasn’t long ago when these carriers were known as “commuters”. Could it be that this is an epic David vs. Goliath transfer of the old guard industry shake up? Or, is it yet another string of naive investors in aviation with ego and money to lose?

WAMU’s Jim Rosenberg reports, on the “drama at Dulles”
[listen ] to the broadcast (requires realaudio player)

The heat has been turned up on the MESA raiders. ACA has hired big guns, Morgan Stanley & Co. (acting as financial advisor) and Gibson, Dunn & Crutcher LLP (these are the same folks representing PeopleSoft vs. Larry Ellison and his Oracle hostiles) The guns have been brought to bear and these power brokers are using their influence on the hill.

On Oct. 24, United’s Finance Chief, Jake Brace, had said the carrier hoped to have a contract signed with Mesa “as soon as possible…in days not weeks!”

Thirteen days after the comment, there’s still no deal. The outcome of a Mesa/UAL deal is Mesa’s Ace-in the-hole card. What would the effect be on ACAI share prices if Mesa/UAL were to announce an IAD deal? vs. What will be the effect on ACAI shares when ACA/Independence makes the new brand ‘grand rollout and aircraft order’? If you were Mesa/UAL would you want to be preemptive by having the first word (stealing ACA’s thunder so to speak) or would it be beneficial to minimize (throw water on) ACA’s media honeymoon. There must be some strategy as to who makes the first move.

The one with the highest stock price wins!

.:Stand-by for the first move:.

Fearless leader has mentioned that he believed that big brother was playing some role behind the scenes. UAL quickly denied any such thing. One day later, UAL announces that it wishes to fast track a contract commitment with the black hats. Such a move would bouy their stock value, essentially helping to lower the cost of acquistion. Greasing the skids for Mesa. Coincidence?

Atlantic Coast has turned the other cheek so to speak and officially rejected the bid from Mesa. Humorous that Atlantic Coast minimizes the offer by calling it: “Mesa’s expression of interest”. The gloves may yet come off as said takeover attempt now becomes hostile. ACA will bash the Mesa (flawed) business plan while dragging Mesa business partners (United and USairways) through the mud by association. Big Guns, Morgan Stanley & Co. acting as financial advisor and Gibson, Dunn & Crutcher LLP acting as legal counsel have been hired to watch the ACA flank.

It is no secret that aca BOD has been resisting overtures from their uninvited suitor. What we would like to know is —- Do the white hats have matters in hand with their delay and stonewall strategy? Is this the strong silent act before the storm a la Clint Eastwood or Steven Segal? OR does J.O. have them in a head lock check mate?

I think that the new California Gover’nator has the support of the electorate with his most excellent victory. Congrats. I think that he has allied himself with some sharp people that will offer him good advisement. He will use his willpower, personality, celebrity to rally and bring together those who can help him fulfill his campaign promises. People were skeptical of Ronald Regan (the actor) at first too. But, look at all that he was able to achieve. He doesn’t fit the typical bureaucratic model. It’s a welcome shock to the system. Not only does it affirm our American dream (that anybody can be somebody) but to the status quo, it’s a huge wake up call. Go Awhhnolt!