Aviation: AMR and US Airways merge

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Aviation

AMR and US Airways merge

American Airlines Group (AAG), formed yesterday when AMR and US Airways Group combined, is poised to rise on confidence that the world’s largest carrier can avoid the pitfalls that dragged down other mergers. The stock might reach $39 (R402) by 2015, estimated Hunter Keay, a Wolfe Research analyst, while Jamie Baker of JPMorgan Chase saw the Texas-based AAG rising to $37. Holders of US Airways, which closed at $22.55 last week, will get shares of the new company in a one-for-one exchange. Doug Parker took the helm as chief executive with lessons learned in creating US Airways in a tie-up with America West Holdings in 2005. As he seeks $1 billion in new revenue and savings, he plans to smooth technology bumps by using the reservation system at AMR’s American, the bigger airline, and has union accords in place to ensure labour peace and predictable costs. “They are in a good position,” Savanthi Syth, a Raymond James Financial analyst, said. “That’s not to say they won’t have any hiccups, but they have their own merger experience and they’ve watched what’s worked and hasn’t worked for others. They will be a formidable competitor.” AAG’s shares began trading yesterday and changed hands for $24.49 at 11am in New York. AMR emerged from two years in bankruptcy protection. – Bloomberg

Property

Arrowhead nets Monash SA digs

Arrowhead, the listed property fund, reported yesterday that it had concluded an agreement with Standard Bank for the acquisition of 333 residential units at an aggregate purchase consideration of R150 million cash. All of the units are let to Monash University South Africa on a triple net lease. Monash sub-lets the units to students attending its campus in northern Johannesburg. The transaction is subject to Competition Commission approval and Arrowhead expects the effective date to be February 1 next year. It is Arrowhead’s second major residential acquisition, which, together with the previously announced Jika portfolio, increases the value of its combined residential portfolio to about R550m. Since listing in December 2011, Arrowhead has grown its asset value from R1.4 billion to R4bn. – Roy Cokayne

Leisure

Premier Hotels picks uMhlanga

The fast-growing Premier Hotels and Resorts group has chosen uMhlanga, the popular tourist resort north of Durban, which is also developing as a growing market for business conferences, as a site for its newest hotel development. It has acquired a site next to the KwaZulu-Natal Sharks Board on uMhlanga Ridge for a hotel with approximately 160 sea-facing rooms and conference facilities in addition to a spa and restaurants. – Audrey D’Angelo


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