AAMRQ: TPG, US Airways (LCC) and Delta (DAL) consider bids for AMR Corp-- WSJ ($0.36)
Jan 12, 2012, 12:59 pm
#46
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AS management must be panicking at the prospect of being the very junior partner to a merged AA/DL. They could cooperate with a third party like TPG to try to acquire AA and roll AS into a new larger AA with senior management from AS.
Jan 12, 2012, 1:04 pm
#47
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[QUOTE=panjabi;17801500]
Your right in the sense that a DL/TPG bid could then be counterbided by USAir and any financial partner it brings to the table not to mention private equity or other investor groups. AA could become like the hot girl in daisey dukes at the beach bonfire party.
The problem is once you go into any form of Bankruptcy the outcome can be unpredictable and certainly not bound by any gentleman's agreement.
<snip>
QUOTE]
That is why it is called a "gentleman's agreement". There is no legal binding.
I agree that NOTHING is guaranteed in a BK process. However, it is not uncommon at all for companies to have post BK financing or exit financing lined up BEFORE going into restructuring BK
Keep in mind, this is very common in the industry. Now, it is quite possible that Bill Gates can come to the BK court and say "I offer $20 billion for AMR and it will now be called Windows 7 Airlines" and the court will accept
But assuming rational business players, I will tell you that the money TPG and IAG will put up will be hard to match by US Airways or by most other companies like KKR, especially when then sweetener is going to be "integration benefits" provided by IAG, which will translate into direct revenue for the reborn AMR
The judge will take all of that into consideration.
So, is a sure thing? No. However, is it HIGHLY likely? Yes.
See me on this board in about 6-12 months. If I was wrong, I will buy you 2 rounds of scotches in any Admirals Clubs of your choice.. heck make that 5.. .2 just makes me want 2 more
<snip>
QUOTE]
That is why it is called a "gentleman's agreement". There is no legal binding.
I agree that NOTHING is guaranteed in a BK process. However, it is not uncommon at all for companies to have post BK financing or exit financing lined up BEFORE going into restructuring BK
Keep in mind, this is very common in the industry. Now, it is quite possible that Bill Gates can come to the BK court and say "I offer $20 billion for AMR and it will now be called Windows 7 Airlines" and the court will accept
But assuming rational business players, I will tell you that the money TPG and IAG will put up will be hard to match by US Airways or by most other companies like KKR, especially when then sweetener is going to be "integration benefits" provided by IAG, which will translate into direct revenue for the reborn AMR
The judge will take all of that into consideration.
So, is a sure thing? No. However, is it HIGHLY likely? Yes.
See me on this board in about 6-12 months. If I was wrong, I will buy you 2 rounds of scotches in any Admirals Clubs of your choice.. heck make that 5.. .2 just makes me want 2 more
Jan 12, 2012, 1:05 pm
#48
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How so? Some find the short walk to the satellite a burden but I don't mind it. Besides, once CO moves to the new facility hopefully DL will reopen the second club in the current Presidents Club and add more flights. A has more natural light, better dining & shopping options, and LEED certified facility. Sure B has more convenient parking but other than that what is wrong with A?
Jan 12, 2012, 1:07 pm
#50
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Jan 12, 2012, 1:11 pm
#51
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Interesting..... My guess is in the event of an AA break up (As of right now I don't see it happening) DAL is looking into what parts/assets they want to acquire. We shall see.
Jan 12, 2012, 1:13 pm
#52
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It would be nice to have the title of this thread modified - TPG and DL are separately considering bids. The prospect of a DL takeover made me throw up in my mouth a little.
Jan 12, 2012, 1:19 pm
#53
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Not true. TPG is a very well established company and has been backing airlines for the last 2 decades. They are not some shell company set up 30 days ago for the express purpose of circumventing US law
Nothing in US law prohibits IAG from sending its managers to the US or even coordinating with the reborn AMR
No one would ever accuse TPG of being a proxy company for a foreign interest. They invested in America West and Continental and the DOJ never blocked them from those investments.
Nothing in US law prohibits IAG from sending its managers to the US or even coordinating with the reborn AMR
No one would ever accuse TPG of being a proxy company for a foreign interest. They invested in America West and Continental and the DOJ never blocked them from those investments.
There's no way IAG is going to get to send a bunch BA/IB execs over to run a post-Ch. 11 AA, get 24.9% equity with TPG holding controlling interest but not being the managing partner, and get approved. Won't happen. Not in a million years. The managing group is going to have to be US citizens with longtime experience in US airline management, not some front for BA/IB.
I suspect the group that's coordinating with TPG isn't IAG. Hint: TPG and AW have worked together before.
Jan 12, 2012, 1:21 pm
#54
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How so? Some find the short walk to the satellite a burden but I don't mind it. Besides, once CO moves to the new facility hopefully DL will reopen the second club in the current Presidents Club and add more flights. A has more natural light, better dining & shopping options, and LEED certified facility. Sure B has more convenient parking but other than that what is wrong with A?
Admittedly I've never really evaluated the aesthetic merits of either terminal, but I as long as I stick with Terminal B, I won't be there long enough to have reason to.
Jan 12, 2012, 1:21 pm
#55
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There's no way the DOJ (especially under this business unfriendly Administration) would allow any airline merger that would give that combined carrier more than 25% of the U.S. market. Never. Let's not forget EU regulators either; that's a lot of trans-Atlantic service for just one group of airlines with ATI. And also there's the politicians in their respective states. Out of MSP/ORD/CVG/DTW who survives, who doesn't? Can't have all 4 be hubs in the Midwest. A US-AA or AS-AA union would fare much better in getting approved.
Jan 12, 2012, 1:24 pm
#56
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Go look at what happened to VX's first CEO, Fred Reid. The DOT made his departure from the job a condition of VX getting permission to operate in the USA. Why? Because he was too close to SRB. And the DOT has mandated changes in VX's ownership structure over time to make damned sure SRB isn't really running the show via a shell game. They're going to be even more suspicious now (and less likely to give leeway).
There's no way IAG is going to get to send a bunch BA/IB execs over to run a post-Ch. 11 AA, get 24.9% equity with TPG holding controlling interest but not being the managing partner, and get approved. Won't happen. Not in a million years. The managing group is going to have to be US citizens with longtime experience in US airline management, not some front for BA/IB.
I suspect the group that's coordinating with TPG isn't IAG. Hint: TPG and AW have worked together before.
There's no way IAG is going to get to send a bunch BA/IB execs over to run a post-Ch. 11 AA, get 24.9% equity with TPG holding controlling interest but not being the managing partner, and get approved. Won't happen. Not in a million years. The managing group is going to have to be US citizens with longtime experience in US airline management, not some front for BA/IB.
I suspect the group that's coordinating with TPG isn't IAG. Hint: TPG and AW have worked together before.
Regarding TPG and USAirways, not going to happen. I cannot say on this board right now, why I make the statement, but for the sake of this thread, let us just say it is my opinion
Jan 12, 2012, 1:25 pm
#57
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TPG is a very well established company and has been backing airlines for the last 2 decades. They are not some shell company set up 30 days ago for the express purpose of circumventing US law
Nothing in US law prohibits IAG from sending its managers to the US or even coordinating with the reborn AMR
No one would ever accuse TPG of being a proxy company for a foreign interest. They invested in America West and Continental and the DOJ never blocked them from those investments.
Nothing in US law prohibits IAG from sending its managers to the US or even coordinating with the reborn AMR
No one would ever accuse TPG of being a proxy company for a foreign interest. They invested in America West and Continental and the DOJ never blocked them from those investments.
- an individual who is a citizen of the United States;
- a partnership each of whose partners is an individual who is a citizen of the United States; or
- a corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, and in which at least 75 percent of the voting interest is owned or controlled by persons that are citizens of the United States.
I don't read that to permit any owner, either majority or minority, to exercise control over a US-based airline without meeting the above test. Specifically, a firm meeting the requirement (TPG in your example) could not "farm out" control of the airline to a foreign minority owner, even if that firm doesn't own more than 25% of the stock, if that firm were to exercise control over the airline. An argument could be made as to who controls the airline in such a situation, but it seems that the rules have historically be read in such a way as to limit what you're suggesting. Basically, the rules aren't there just to require that ownership be by Americans, but that control of the airline be by Americans. It's not just about the nationalities of the owners, it's also about the nationalities of those controlling the airline.
Jan 12, 2012, 1:26 pm
#58
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Jan 12, 2012, 1:27 pm
#59
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<snip>
I don't read that to permit any owner, either majority or minority, to exercise control over a US-based airline without meeting the above test. Specifically, a firm meeting the requirement (TPG in your example) could not "farm out" control of the airline to a foreign minority owner, even if that firm doesn't own more than 25% of the stock, if that firm were to exercise control over the airline. An argument could be made as to who controls the airline in such a situation, but it seems that the rules have historically be read in such a way as to limit what you're suggesting. Basically, the rules aren't there just to require that ownership be by Americans, but that control of the airline be by Americans. It's not just about the nationalities of the owners, it's also about the nationalities of those controlling the airline.
Jan 12, 2012, 1:32 pm
#60
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Normally I avoid speculation threads... but I chuckled at the thought that we'd be riding MD-80/88/90s forever if AA and DL combined.