Allegheny Airlines disclosed yesterday that it is considering making a purchase offer for Hughes Airwest, an airline operating primarily in the West whose routes now extend to Milwaukee, Des Moines and Houston.
Allegheny made the disclosure in a prospectus for a $25 million debt offering to non-U.W. investors through a subsidiary set in the Netherlands Antilles.
The Washington-based carrier stressed that no conclusion regarding an offer has been reached, that other companies also may be interested in acquiring Hughes Airwest, and that there is no assurance that it would be the successful bidder if it did decide to make an offer.
Hughes Airwest is a subsidiary of Hughes Air Corp., which is 22 percent owned by the estate of Howard R. Hughes Jr. and 78 percent owned by Summa Corp. Last month, Hughes Airwest said the shareholders were considering the possibility of disposing of the airline, but did not identify any potential buyers. A statement issued by the airline emphasized then that no negotiations were underway.
David Varner, vice president-legal of Summa, said yesterday the company would have no comment on Allegheny's announcement. "In fact, the Allegheny release was a surprise to us," he said, although he added they were "glad they were looking at it." He also declined comment on whether other prospective purchasers were in touch with Summa.
As of the end of March, the airline served 50 airports in 12 states in the West in addition to the three cities in Texas, Iowa and Wisconsin; seven cities in Mexico and two in Canada. It operates a fleet consisting of 49 jet planes, including 42 DC9s and seven Boeing 727s, and seven propeller aircraft.
Allegheny said in its prospectus that it is reviewing preliminary information about Airwest now; if it looks promising, the management could recommend to its board of directors that Allegheny make an offer to acquire Airwest's stock in exchange for some combination of cash, debt securties and Allegheny stock, the prospectus noted.
It emphasized, however, that a number of other companies - some having greater financial resources than Allegheny - may be actively considering acquiring Airwest.