Hedge Fund Will Take Shares in Airline Merger

Tudor Group will invest $65 million in the America West/US Air tie-up.
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America West Group



US Airways


have rounded up another backer for their merger.

The two airlines said the Tudor Group, a hedge fund, has committed to investing $65 million in exchange for about 3.9 million shares of common stock in the merged carrier.

"The inclusion of Tudor as a new equity partner is a clear indication that investors continue to find great potential in our proposed merger with America West Airlines," said Bruce R. Lakefield, US Airways president and CEO, in a news release.

America West and US Airways announced their merger on May 19, saying it would create a full-service nationwide airline with discount prices. The plan would significantly increase America West's scale and lift US Airways out of Chapter 11 bankruptcy protection. But analysts have said it faces significant challenges, including meshing two labor groups with different seniority levels.

The airlines have said they plan to close the merger this fall. Including the Tudor Group commitment, the carriers have rounded up $565 million in equity financing. Other investors include Air Canada parent ACE Aviation Holdings, an affiliate of regional carrier Air Wisconsin and hedge funds PAR Investment and Peninsula Investment Partners.

America West shares were off 3 cents, or 0.5%, at $5.90. US Airways shares, which will be canceled when the company emerges from bankruptcy, traded at 68 cents.