America West Airlines said Monday it has agreed to buy up to 118 Airbus Industrie A-320s in a deal worth as much as $5 billion that could pave the way for the fast-growing airline to bid for Pan Am Corp.'s lucrative Northeast shuttle.
Last week, America West said it had been in talks about buying the shuttle, which serves Washington, New York and Boston.Under the deal with Airbus, the company said it will buy or lease 74 aircraft, including 16 being leased immediately. The remaining planes will be delivered over the next 15 years.
America West took options on an additional 44 Airbus planes. If all options are exercised, the deal would be worth $5 billion.
The transaction also includes a cash advance to the airline that some analysts say could be used by America West to help finance a bid for the shuttle.
Airbus is a European consortium made up of France's Aerospatiale, Messerschmitt-Boelkow-Blohm of West Germany, British Aerospace Plc and CASA of Spain.
Other parties involved in the Airbus-America West deal include Kawasaki Enterprises, which will lease America West 24 aircrafts over a five-year period, and International Aero Engines, another multinational consortium, which will provide the V-2500 engines for the airplanes, which have 148 seats divided into two classes.
America West said that on signing the agreement it will receive a $220 million package of cash, support services, spare parts and training. Airbus will supply the parts and training; cash and support services will come from "the engine supplier and lessors."
America West reportedly has been working on a deal in which it would finance the purchase of the shuttle by borrowing money from Guinness Peat Aviation, the world's largest aircraft-leasing company, and International Aero Engines in exchange for agreeing to lease a number of A-320 jets.
It was not immediately clear whether the deal announced Monday would give America West the financing it needs to bid for the shuttle. America West spokesman Mike Mitchell denied that the two deals are linked.
But analysts believe the cash component of the deal will allow America West to pursue the shuttle, which has also attracted the interest of other carriers.
America West currently flies from Phoenix and Las Vegas to Boston, New York, Washington, Baltimore and Newark, N.J.
Buying the Pan Am Shuttle - a business-oriented flying bus with in-flight telephones, free business publications and fax machines in its waiting lounges - would throw America West into the heart of the corporate East Coast.
International Aero Engines, a consortium of American, British, Japanese, Italian and German companies, said the order for the V-2500 engines would be worth more than $1 billion.