The TWA system timetable from 1974 looks fine, but US Airways' Scott Kirby argues that TWA got "out-competed" in the territory on the map in the background. Jeremy Keith / flickr.com

Pan Am and TWA, two iconic airlines that were grounded for good in 1991 and 2001, respectively, got “out-competed” domestically by rivals such as United, American, Delta, Continental and Northwest, and that contributed to the duo’s demise.

To be sure, the reasons Pan Am and TWA went bust are complex, but US Airways president Scott Kirby, a key member of the US Airways-American Airlines transition-planning committee, seized on the weakness of the Pan Am and TWA domestic networks as the beginning of the end despite the fact that they were the “preeminent” carriers of their era.

The importance of domestic networks often gets short shrift, said Kirby during a presentation May 15 at the Bank of America Merrill Lynch 2013 Global Transportation Conference in Boston.

Kirby argued that domestic networks are “incredibly important” as a feeder to airlines’ global networks.

There is a punch line, of course.

Kirby presented a slide showing that the combined US-Airways-American Airlines would be the #1 carrier on the East Coast, #1 in the central part of the country, and #3 in the West.

Pointing to the new American’s projected East Coast dominance, Kirby said the East Coast “is the largest, most lucrative travel region in the world.”

“This network,” he added, referring to the reach of the new American, “without question will be the strongest domestic network in the country.”

It’s not as if United and Delta are about to roll over and play dead, however.

United, for one, argues that it likes its competitive position in relation to the new American Airlines despite “overlaps” in Chicago, Dallas, Houston, Los Angeles and New York.

Nervousness subsiding

On other merger-related matters, Kirby conceded he had been “nervous” about how the transition would go with American executives “given how we got here.”

He was referring to American’s initial reluctance to consider a merger with US Airways.

“We are working [together] quite well so far,” Kirby said, confirming he believes the merger will get completed in the third quarter, pending Department of Justice approval.

Kirby said the merged airline would get off to a quick start in producing $1 billion in expected synergies, pointing to the brisk financial performance of the merged America West and US Airways in their maiden quarter together despite operational difficulties.

Shamelessly copying Delta

The new American looks at the success of the Delta-Northwest Airlines merger as a case study in a successful merger integration, said Kirby, without mentioning the disastrous United-Continental integration.

“We’ve tried and shamelessy copy some of the things that they’ve done,” Kirby said, referring to how Delta and Northwest opted to transition to Delta’s larger reservations system rather than the reverse.

He said the transition team is studying Delta’s steps and is implementing an “adopt and go” strategy.

“We know we won’t be flawless, but we think we will do pretty well, and we’ll minimize the bumps,” Kirby said.

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Kayak filed its results with the Securities and Exchange Commission yesterday, and it could be the final time such detail is publicized as Priceline’s $1.8 billion acquisition of Kayak is expected to close, after much delay, May 21.

Kayak’s net income in the first quarter fell 48.6% to $2.1 million as revenue rose 12.1% to $82.3 million, compared with the first quarter of 2012.

What changed?

Stock-based compensation soared 64.5% to $4.9 million, brand marketing for all of those commercials jumped 13.8% to $23.8 million, and online marketing/keyword purchases for i Kayak, and its Swoodoo and CheckFelix units climbed 31.9% to $24 million in the first quarter.

Of course, Kayak’s symetrical $23.8 million and $24 million spend on brand and online marketing, respectively, is just a proverbial drop in the bucket when measured against the $27.7 million and $403.1 million that soon-to-be parent Priceline shelled out on offline and online advertising in the first quarter.

That’s a big advertising piggybank that Kayak could benefit from.

For the quarter, Kayak saw its queries rise 18.1% to 358 million, and downloads of its apps increased 17% to 3 million.

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A car with the RelayRides magnet in central San Francisco in August 2011. Michael Andersen / Flickr

With a still small, but growing, market around people that want to rent out their personal cars to their neighbors, some consolidation seemed inevitable. On Tuesday startup RelayRides, which was one of the first companies to jump into the neighborhood car sharing market, announced that it has acquired Wheelz, a startup that had originally focused on building car sharing communities at universities.

RelayRides says it will acquire, among other things, Wheelz’s DriveBox technology, which enables Wheelz users to unlock and drive away in a rented car, without having to meet with the owner and get a key. Picture it basically like one of Zipcar’s unlocking and verification systems.

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Burkle, whose Yucaipa Cos. is swapping $230 million in notes and preferred stock for ownership of Morgans’s Delano South Beach Hotel in Miami and a restaurant company, “threatened to crater” some of the hotel company’s other deals if directors didn’t accept his buyout bid and offer to backstop a $100 million recapitalization effort, A. Thompson Bayliss, an attorney for a Morgans board member opposing the deal, told a judge today. Burkle also serves on the hotel chain’s board.

“What we have here is business terrorism by Mr. Burkle,” Bayliss told Delaware Chancery Court Judge Travis Laster at a hearing in Wilmington today.

Jason Taubman Kalisman, a Morgans director and a founding member of its largest shareholder, OTK Associates, sued his fellow board members last month over their decision to back the Yucaipa deal and the $100 million rights offering to current investors. OTK owns about 14 percent of New York-based Morgans’s shares, according to court filings.

Proxy Fight

OTK began a proxy fight earlier this year, saying it’s seeking to overhaul Morgans’s board and return the company to profitability. The 13-hotel chain has lost money in every quarter since 2007, according to data compiled by Bloomberg. Kalisman wants Laster to bar the swap and recapitalization from proceeding until after the July 10 shareholder vote.

Last month, Morgans officials agreed to postpone the rights offering until May 16 so Laster could consider Kalisman’s complaints about the deal. OTK and Kalisman accused Morgans’s current directors of rushing to complete the offering before the company’s annual shareholder meeting, originally scheduled for May 15, to avoid losing their seats as a result of the proxy vote.

Lawyers for the Morgans board and Burkle argued today the swap and recapitalization deals are best interests of the hotel company’s investors and shouldn’t be enjoined.

‘Rhetoric, Innuendo’

“An injunction could lead to the breakup of this deal,” Raymond DiCamillo, a lawyer for company directors, told Laster.

Kalisman’s lawyers are relying on “rhetoric and innuendo” to raise question about Burkle’s negotiations with his Morgans board colleagues over the swap and the recapitalization, Bruce Silverstein, the billionaire’s lawyer, said during the hearing.

Silverstein added that Burkle isn’t seeking to gain control of the hotel chain in the $230 million deal, which includes the billionaire’s holdings in Morgans preferred shares and convertible notes. Burkle also will retire warrants and assume an $18 million promissory note as part of the deal.

Frank Quintero, a spokesman for Los Angeles-based Yucaipa, didn’t immediately return a call seeking comment on Bayliss’s claims the billionaire threatened to disrupt Morgans’s operation if his board colleagues didn’t support his acquisition bid.

‘Various Threats’

Kalisman contends in court filings the company’s plan to sell $100 million in stock to existing shareholders at $6 a share could mean Burkle winds up with as much as 32 percent of Morgans’s shares if the rights aren’t exercised in full. He also objects to the sale of the Miami hotel and the Light Group, a restaurant company, to the billionaire in exchange for Morgans notes and preferred shares.

As part of his negotiations over the deal, Burkle “liked to use various threats to try to intimidate” his colleagues on Morgans board, Kalisman’s lawyers said in court filings.

“Burkle repeatedly threatened to litigate to pressure” Morgans officials into a deal, according to a filing unsealed just before today’s hearing. The billionaire also threatened to scuttle deals aimed at having Morgans executives operate hotels in Moscow and Las Vegas, Kalisman’s lawyers said.

Kalisman contends Burkle’s supporters on Morgans board failed to seriously consider competing bids for the hotel and food-and-beverage company.

Even though he was a Morgans director and a member of the board group responsible for evaluating such transactions, his colleagues “weren’t forthright” about the rights offering’s details and didn’t give him “reasonable notice” that the deal would be considered, Bayliss argued today.

The Morgans chain features boutique hotels such as the Mondarian SoHo in New York, the Clift Hotel in San Francisco and the Delano Marrakech in Morocco.

The case is Kalisman v. Friedman, 8447, Delaware Chancery Court (Wilmington).

–With assistance from Prashant Gopal in Boston. Editors: Glenn Holdcraft, Fred Strasser

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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The two companies said they have received all the needed approvals from regulatory agencies.

Norwalk, Conn.-based Priceline.com Inc. announced last November that it would buy competitor Kayak Software Corp. for $1.8 billion in cash and stock.

Kayak, which went public last July, runs a website that lets users compare other travel sites when looking for flights, hotels and rental cars. Customers can book directly on Kayak’s website. Kayak also sends some customers to other websites to complete their purchases and earns fees for those referrals.

Shares of Kayak rose 80 cents to $41.55 in afternoon trading. Shares of priceline.com rose $3.85 to $739.12.

Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. 

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The pact involves a combination of cash and stock. Global Eagle was founded in 2011 by former MGM CEO and chairman Harry Sloan and former CBS Entertainment president Jeff Sagansky.

In Nov 2012, it acquired Row 44, an airline wi-fi provider and a majority stake in Advanced Inflight Alliance, a supplier of games, movies and entertainment for airlines, in deals valued at $430 million.

From release: The acquisition expands Global Eagle’s relationships with airlines and provides entry into the cruise line industry and other non-theatrical markets. PMG currently serves a customer base of over 10 motion picture and TV distributors and 50 airlines and cruise lines. The company is expected to generate over $35 million in revenues and in excess of $4.5 million in adjusted EBITDA in 2013.

Related: Sucker’s moon: Why bundling access and content doesn’t make sense — even at 10,000 feet

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It’s been tough going for mileage-tracking services such as MileWise and TripIt, to name a few, as four major U.S. airlines — Southwest, United, American and Delta — have refused to let these sites access members’ account information.

And, flight-search anyway has tight margins and is a rough slog.

Rumors were rampant about talks between Yahoo, which is desperate to hire tech talent, and MileWise, which hasn’t updated its Twitter account since mid-April.

Pando Daily broke the story several days ago that talks were heating up between the two parties.

In October 2012, MileWise struck a partnership with ITA Software, enabling travelers to pay for flights using a combination of cash, airline miles and/or hotel points.

That’s a wonderful feature, but it wasn’t enough to enable MileWise to reach a mass audience, and with flight-search such a revenue-margin-stingy business, it obviously was tough for MileWise to hang on.

MileWise, founded in 2010, had secured about $1.5 million in seed funding.

Here’s MileWise’s statement:

“We’re proud to announce we’ve been acquired by Yahoo!

“MileWise began almost four years ago with the goal of creating a simple, powerful product to help people and providers get the most value out of their rewards.

“Along the way, we’ve been lucky to connect with an incredible community of fellow travelers, without whom we wouldn’t have made it this far. To everyone who took MileWise for a spin: THANK YOU! You shared our vision of what MileWise could become, and generously donated your time and passion towards making it a reality.

“As part of the transition, the MileWise service will be shutting down. It’s tough to say goodbye to something we’ve dedicated so much to. But, we’ve tried to make it easy to take your data with you. We’ll be sending everyone an email with instructions on exporting your data, and if you have any questions don’t hesitate toemail us.

“The MileWise team will be joining Yahoo! in NYC’s Bryant Park office. We’re thrilled to be joining such a talented group of inventors, and can’t wait to get working on the next big thing coming out of Yahoo.

“Again, we’d like to thank everyone who supported us along the way: our investors, our employees, our partners, and most importantly, our fellow travelers.

“The MileWise Team”

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The last major hurdle to Priceline’s $1.8 billion of Kayak was removed when the UK’s Office of Fair Trading today announced that it cleared the merger after conducting a regulatory review.

The transaction is slated to close May 21.

The merger had initially been slated to close during the first quarter of 2013, but in early March the OFT announced that decision day would be around May 9.

The U.S. Justice Department approved the merger in early January. Kayak shareholders overwhelmingly approved the merger in early March.

Kayak and Priceline will soon announce a closing date, and then it’s game on with public company Kayak become part of the Priceline Group as Kayak will continue to operate its own brand and semi-independently.

Priceline is buying Kayak to improve Priceline’s earnings, and to tap Kayak’s mobile skills and technology talent. Being in the Priceline family could propel Kayak’s international growth.

The OFT earlier cleared Expedia’s majority stake in German hotel-metasearch site Trivago without much fuss.

Priceline is acquiring Kayak for at $40 per share, paying $500 million in cash, and $1.3 billion in equity and stock options.

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The Facebook logo is pictured in the Facebook headquarters in Menlo Park, California January 29, 2013. Robert Gailbraith / Reuters

Facebook Inc is in advanced talks to acquire Israeli mobile satellite navigation start-up Waze for $800 million to $1 billion, business daily Calcalist reported on Thursday.

Due diligence is underway after a term sheet was signed, Calcalist said, adding that talks began six months ago.

Waze uses satellite signals from members’ smartphones to generate maps and traffic data, which it then shares with other users, offering real-time traffic info.

Officials at Waze declined to comment on the report.

Waze and Facebook partnered in October 2012 when Waze released its updated version that allows users to share their drive with their Facebook friends.

This would be Facebook’s third acquisition in Israel. It bought Snaptu in 2011 for $70 million and Face.com in 2012 for $60 million.

In the last year, Waze tripled its user base to 45 million and in March alone, 1.5 million users downloaded the free mobile navigation app, Calcalist said.

Reporting by Tova Cohen. Editing by David Cowell.

Copyright (2013) Thomson Reuters.

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Qatar has approached International Airlines Group, the owner of British Airways and Iberia, with an informal offer to become the company’s largest shareholder by buying the 12 percent stake held by Spain’s nationalized lender Bankia, the Financial Times reported.

Qatar had approached IAG to ask whether the company would welcome it as a shareholder, the FT said citing two people familiar with the matter.

The financial daily cited one of those people as saying the initial approach was made last year, though it wasn’t clear which Qatari entity would buy the Bankia stake.

A third person familiar with the matter told the paper that IAG had informed Bankia of the interest from Qatar about three months ago.

“This is an issue for Bankia and we’re not going to comment further,” an IAG spokeswoman told Reuters.

Bankia could not be immediately reached for comment by Reuters. It had declined to comment to the FT, saying it would seek the best possible price for its non-core assets.

Earlier this year, Bankia – the biggest failed bank in Spain’s history – hired Rothschild to help sell its stakes in companies including power group Iberdrola and insurer Mapfre, as the bank rebuilds its capital.

(Reporting by Abhishek Takle in Bangalore; Editing by Richard Chang)

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