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RSA won't invest, for now, in airline merger

By Phillip Rawls
Associated Press Writer

MONTGOMERY — The Retirement Systems of Alabama, which wrote off a $240 million investment in US Airways last year, plans no more investment — for now — in a proposed merger of the bankrupt airline with America West.

David Bronner, CEO of the state pension system, said RSA was asked to invest in the proposed merger, but he declined because RSA would not be given a big enough role in directing the new company.

"They just want your money and don't want you to have any control," Bronner said.

His position on investing could change, he said, if the pension fund were ever offered a significant role on the merged airline's board.

In the proposed merger, America West would get six seats on the board of directors, US Airways would have four, and three new investors would each get one seat.

"Normally the people who put in new money have the majority of the seats, which is what's unusual about this deal," Bronner said in an interview Friday.

When US Airways made the first of two trips into bankruptcy its exit was sped along by a $240 million investment from Alabama's pension fund for state workers and education employees. At that point, the pension fund got the majority of seats on the airline's board and Bronner became chairman of the US Airways board.

Bronner remained as chairman when the airline made its second trip into bankruptcy last year, but the pension fund wrote off the $240 million investment as a loss.

Bronner said he will remain as chairman until US Airways comes out of bankruptcy, but once that happens, RSA's role will be over except that it is still providing financing for two or three of the airline's planes.

RSA's $240 million investment in US Airways represented 1 percent of the pension system's total investments.

Looking back on the deal, Bronner said it paid benefits because it allowed Alabama officials to meet executives of France-based EADS, parent company of European aircraft maker Airbus, and helped get Mobile on EADS's list of four finalists for an aircraft plant.

When RSA invested in US Airways, the airline started offering ticket discounts to state workers and education employees, and the Alabama Bureau of Tourism and Travel designated US Airways as "The Official Airline of Alabama Tourism." Bronner said Friday it is too early to say what will happen to those relationships.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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