Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
AA May Buy AMX And MXA!  
User currently offlineLeoDF From Mexico, joined Aug 1999, 359 posts, RR: 5
Posted (9 years 11 months 1 week 4 days 4 hours ago) and read 6729 times:

According to Reforma newspaper Fox has decided to sell Mexicana and Aeromexico to American Airlines.

Canton, a priista senator, said that Congress has approved the sell of Mexicana and Aeromexico in the 2005 Income Law (Ley de Ingresos).

In the words of Canton: "After revising the public companies that the government is awaiting to sell, it took us to the conclusion that the Government of Vicente Fox has decided to deliver Mexicana and Aeromexico to the American company American Airlines."

The senator accused Fox of acting in a "cheating" way, as he continues to privatize state companies without informing the citizens and now with the legislative power. This comes after from an article on this Income Law that states that the government will recieve 2500 million pesos from incomes regarding the selling of its public companies.

More info at:

http://www.reforma.com/nacional/articulo/466838/




[Edited 2004-11-15 23:56:37]


Lloyd Aereo Boliviano
29 replies: All unread, showing first 25:
 
User currently offlineEddieDude From Mexico, joined Nov 2003, 7592 posts, RR: 42
Reply 1, posted (9 years 11 months 1 week 4 days 4 hours ago) and read 6629 times:

Quite frankly I don't know what to make of the article. For starters, the less than U.S.$250 million price that the Congressmen contemplated while drafting the 2005 Ley de Ingresos seems very low to me.

On the other hand, the reference to AA is simply a newspaper's quote of the statements made by a Congressman and doesn't seem to be supported by any other type of evidence.

While I think that there is a strong possibility that the IPAB-owned airlines will be sold in 2005 (for a number of reasons: this administration's last chance, new leadership in the competition watchdog, supposedly profitable results of CINTRA in 2005, etc.), I don't think an agreement has been reached just yet. And we must not forget that foreign investment is limited to 25% of the voting capital stock of Mexican carriers, so whichever foreign carrier participates in the acquisition will definitely not be the controlling shareholder.

One last thing: AA may not be under court protection, but it is not doing well financially, so I don't see AA venturing in an acquisition at this point. A European carrier might be in a better position to make an investment in AM and/or MX given the current state of the global airline industry.

I suggest to change the name of this thread, since the way it is written is very misleading.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlineLeoDF From Mexico, joined Aug 1999, 359 posts, RR: 5
Reply 2, posted (9 years 11 months 1 week 4 days 4 hours ago) and read 6558 times:

Sorry EddieDude but they way Reforma put it was also a bit misleading... Anyway, as I am talking right now with Ghost, he told me that those 250 million dollars could only represent the 25% of the total. On aviation companies there has to be a minimun 75% of Mexican capital.

Anyway this are very interesting revelations. True or not, there has to be someone behind all this, and this time I think is the senator.

Regards

A. De Leo
"PiloT"



Lloyd Aereo Boliviano
User currently offlineEddieDude From Mexico, joined Nov 2003, 7592 posts, RR: 42
Reply 3, posted (9 years 11 months 1 week 4 days 3 hours ago) and read 6483 times:

Hi Alejandro. Actually, thanks a lot for posting the news. I had not read the paper today, so seeing your post made me rush to it. I am in complete agreement with you that the fact that a Senator is mentioning this is a sign that something is going on at CINTRA.

I still don't know about the price. $250 million Pesos for 25% of CINTRA sounds more accurate, but now I don't know if it is a bit optimistic. And the reason is the long-term debt, the lease payments and the generally deteriorated situation of CINTRA's finances (including the retired employees liabilities). Under other circumstances, the flag carriers of Mexico would definitely command a very high price due to their position in the market, their routemaps and the goodwill of the brands. I wish we had an investment banker among us so that he could provide a rough estimation of the current market value of MX and AM.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 4, posted (9 years 11 months 1 week 4 days 3 hours ago) and read 6402 times:

Can AMR even afford to buy into MX and AM?

User currently offlineXA744 From Mexico, joined Mar 2004, 734 posts, RR: 3
Reply 5, posted (9 years 11 months 1 week 4 days 3 hours ago) and read 6395 times:


Howdy folks ?,...

Will be meeting next week with some of my friends at the top of AM´s management over a few tequilas,... just hope they get drunk enough and disclose some valuable info that I could later share with you.

I do agree with you EddieDude when you say that American is not in the position to make any substantial investment anywhere at this time. I tend to believe, I do not know why, that most of CINTRA´s assets will be bought using pesetas...

I do not know, just taking a wild guess here.

Regards



No matter how you fly...just never get your wings clipped !
User currently offlineEddieDude From Mexico, joined Nov 2003, 7592 posts, RR: 42
Reply 6, posted (9 years 11 months 1 week 4 days 3 hours ago) and read 6367 times:

Be sure to ask them not just whether talks to sell CINTRA have begun (and with whom), but also whether AM and MX are planned to remain separate in terms of routes and identities.

Hopefully pesetas are not used since they are no longer legal tender anywhere in the world. Euros would be very welcome, though.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlineAacun From Mexico, joined Jan 2004, 546 posts, RR: 1
Reply 7, posted (9 years 11 months 1 week 4 days 3 hours ago) and read 6355 times:
Support Airliners.net - become a First Class Member!

I do also agree that AA may not be in a position to buy MX and AM by itself. But that doesnt mean that AA along with IB and other OneWorld members may not join in to put in a bid for them.......

User currently offlineAvroArrow From Canada, joined Sep 2001, 1045 posts, RR: 0
Reply 8, posted (9 years 11 months 1 week 4 days 3 hours ago) and read 6330 times:

I just hope that Aeromexico doesn't end up changing its livery if this happens. It is one of my favorites, nothing like a shiny new 737-700 in Aeromexico colours.  Smile/happy/getting dizzy

View Large View Medium
Click here for bigger photo!

Photo © Rafael Cordero
View Large View Medium
Click here for bigger photo!

Photo © Juan Carlos Guerra Aviation Photography of Mexico




Give me a mile of road and I can take you a mile. Give me a mile of runway and I can show you the world.
User currently offlineAacun From Mexico, joined Jan 2004, 546 posts, RR: 1
Reply 9, posted (9 years 11 months 1 week 4 days 3 hours ago) and read 6323 times:
Support Airliners.net - become a First Class Member!

Avro:

I have to agree with you. Probably the best 737 livery around......


User currently offlinePzurita1 From Greenland, joined Sep 2002, 1393 posts, RR: 14
Reply 10, posted (9 years 11 months 1 week 4 days 2 hours ago) and read 6214 times:

LeoDF,

I think it has been an unfortunate mistake of the newspaper and writer. What this Senator declared is that the Ley de Ingresos 2005 recognizes an income of up to 2,500 millon pesos by means of the sale of currently government owned firms.

However, this Senator, deliberately said that after this sale is MX and AM (which is very likely) but added that "he believes it is sold to AA".

El Norte and Reforma were mistaken to reproduce this words based on nothing but mere speculation and "grilla" of this Senator....

The only fact from this is: Ley de Ingresos consideres an income of 2,500 millones de pesos from an Asset sale of a government owned firm.

If it is MX and AM then 2,500 million pesos (USD 200M) is an extremely cheap package for 30% of MX and AM stocks (the highest a foreing can invest in an airline). It would be sad to see MX and AM sold for that little value. Expected price of a joint AM and MX (100% equity) is between 2 and 2,5 billion USD.

PZ



Next flight: IAH-DBX-MRU-ANT
User currently offlineEddieDude From Mexico, joined Nov 2003, 7592 posts, RR: 42
Reply 11, posted (9 years 11 months 1 week 4 days 1 hour ago) and read 6148 times:

Pedro, I think the valuation estimation you provide is highly optimistic and, in my non-expert opinion, fails to consider all the liabilities that would be easily discovered during a tax, legal and financial due diligence process. Besides, if you look at the market value of airlines like the U.S. legacy carriers, LA, Brazil's Gol and AM-Transportes Aereos Meridionais (Brazil)">JJ, WN and B6, there is no way you can say that CINTRA is worth that much money.

I honestly do not believe that 100% of a combined AM and MX could be sold in 2005 for more than 1 billion dollars... especially when you consider that the feeder airlines (AeroLitoral and Aerocaribe) will be divested as part of the privatization process.

Somebody in a.net must work for some investment bank and be able to tell us something.

And sorry for being picky, but 25% is the limit of direct foreign investment in the voting capital stock of Mexican carriers under the Ley de Inversión Extranjera in effect. Authorization from the Commission may be obtained in order for the foreign shareholder(s) to purchase series "N" or non-voting stock of the company, but the 25% limit on voting stock would not be altered.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlinePzurita1 From Greenland, joined Sep 2002, 1393 posts, RR: 14
Reply 12, posted (9 years 11 months 1 week 4 days 1 hour ago) and read 6048 times:

EddieDude,
Indeed. I kept the value considered when they were to be sold back in 2000.
Thanks for your correction.
PZ



Next flight: IAH-DBX-MRU-ANT
User currently offlineChgoflyer From United States of America, joined Nov 2003, 622 posts, RR: 0
Reply 13, posted (9 years 11 months 1 week 4 days 1 hour ago) and read 6020 times:

Dont underestimate AMR and their relations with lenders. They can buy AM/MX if their board approves it. As for a European airline buying these two companies that might not be a good "click".


Will someone please wake me up in 4 years
User currently offlineCx340 From Mexico, joined Sep 2000, 609 posts, RR: 3
Reply 14, posted (9 years 11 months 1 week 4 days ago) and read 5981 times:

Just a couple of thoughts:

1.- Like Pedro said, apparently (and I've not been able to confirm this myself) all the 2005 Income Law for the Mexican Federation says is that the government is supposed to receive $2,500 million pesos for the sale and transfer of currently owned entities, but not which entities, or does it? I think the senator rushed to conclusions. The fact is all we know so far is that the sale of CINTRA is authorized, but we are far from it at this point, or at least so it seems. Plus, as mentioned before, there are many legal, tax, financial, operational and technical issues that will definitely cause problems, not to mention the thousands of people being affected in one way or another by this deal, some of which may be powerful enough to delay it if not stop it.

2.- US airlines just do not have the $$$ to purchase an airline conglomerate right now, but assuming they did, why would they want to put millions of dollars into an investment which they can't control (and therefore can't assure its profitability) and which has a history of bad profitability when they have much more immediate and important issues to deal with right now? I just don't see it happening until Congress amends the Foreign Investment Law and allows majority ownership of and controlling voting rights in airlines to foreign investors. And even then, you still have a troubled company (CINTRA) that is in all honesty not necessarily attractive to every foreign airline in the world.

Cheers,


User currently offlineAAplatnumflier From , joined Dec 1969, posts, RR:
Reply 15, posted (9 years 11 months 1 week 4 days ago) and read 5931 times:

AA does have the money to buy the airlines, it is just if they have the money to maintain them. AA has what, $1billion-$2billion in spending money? AA is actually doing better than almost all of the non LCC. Also I believe they are at even or just above even this year. In my opinion AA knows how to fly.


User currently offlineCx340 From Mexico, joined Sep 2000, 609 posts, RR: 3
Reply 16, posted (9 years 11 months 1 week 4 days ago) and read 5878 times:

AAplatnumflier.

AA may have the money, I dont' doubt that, but I just don't think they are about to go on a shopping spree and get themselves a couple of foreign airlines that have been (unfortunately) historically in trouble but more importantly that AA can't control.


User currently offlinePilotcoex From , joined Dec 1969, posts, RR:
Reply 17, posted (9 years 11 months 1 week 3 days 23 hours ago) and read 5729 times:

I just have two words for this (if it happens) F*****N Barbaric

User currently offlineSccutler From United States of America, joined Jan 2000, 5555 posts, RR: 28
Reply 18, posted (9 years 11 months 1 week 3 days 22 hours ago) and read 5356 times:

The transaction discussed above is both politically and practically improbable.

Politically, because I cannot see the government of Mexico easing the foreign ownership requirements enough for a foreign purchaser to actually gain effective control of a Mexican flag carrier, for reasons of sovereignty and pride (both of which matter a great deal).

Practically, because AA could never hope to effectively manage and control the two airlines in Mexico with any measure of success; they could not even manage to buy, integrate and benefit from acquiring established airlines in California, even after two tries. AA needs its cash to preserve itself for a coming turnaround. It hopes.



...three miles from BRONS, clear for the ILS one five approach...
User currently offlineAAplatnumflier From , joined Dec 1969, posts, RR:
Reply 19, posted (9 years 11 months 1 week 3 days 21 hours ago) and read 5214 times:

I could totally see it happening. The Mexican government doesnt want to hold control of the airlines nor does it want to pay to maintain in when the airlines are loosing money. Basically the government is loosing money and my guess is they dont want to. I believe that Vincente is a smart man and that he will make the right decision at the end of the day.

User currently offlineSR117 From Mexico, joined Jun 2000, 799 posts, RR: 1
Reply 20, posted (9 years 11 months 1 week 3 days 20 hours ago) and read 5075 times:

What that dumbass senator says is total nonsense and a sample of the worthless blabber that some polititians spew down here. That AA would consider bidding for a stake in CINTRA is perfectly plausible, but to start saying conjectures to the tune of : "evil mister fox is consorting to deliver our virginal airlines to the sin filled brothel of devilish aa", uggg. Things are quite unclear right now yet, so I think it's quite irresponsible for mister senator to be making those groundless claims.

User currently offlineUsatoeze From United States of America, joined Feb 2004, 358 posts, RR: 3
Reply 21, posted (9 years 11 months 1 week 3 days 20 hours ago) and read 4955 times:

US airlines just do not have the $$$ to purchase an airline conglomerate right now, but assuming they did, why would they want to put millions of dollars into an investment which they can't control (and therefore can't assure its profitability) and which has a history of bad profitability when they have much more immediate and important issues to deal with right now?

Well said and great point. They would have to be taking an incredibly potent drug of some sort to argue against that logic, but worse things have been tried in the past.

If true, this idea just seems awful. Mexican aviation needs divested, but it doesnt need to be put into the hands of either AA or a European carrier.

If something could happen ala Copa and CO....(A 50.01 deal) then that would be different.



War is a very poor political tool
User currently offlineUA777222 From United States of America, joined Dec 2003, 3348 posts, RR: 11
Reply 22, posted (9 years 11 months 1 week 3 days 19 hours ago) and read 4889 times:

AA can buy whatever whenever it wants. Again it all comes back to weather or not the airline is ready to make a gable of this nature and if it's ready to expand in this manner. I think this is just talk and that like everyother announcment here on a.net will turn out the complete opposite. For all we know MX and AM will be sold to WN who will then expand it's routes to Mexico and Centrl America operating the 767's and incoming 777's with a mixed C/s of all three airlines, but still with that dirt cheap price. WHO KNOWS???

Give it time but I think this seems a bit too "rushed" seeing how AA won't even take a/c which cost much less than this whole franchise until next year so to say that they will own the to largest Mexican carriers is outrageous. So don't get your pants in a knot too soon..

Take Care,

UA777222



"It wasn't raining when Noah built the ark."
User currently offlineORD2PHL From United States of America, joined Oct 2003, 313 posts, RR: 0
Reply 23, posted (9 years 11 months 1 week 3 days 10 hours ago) and read 3810 times:

Hold the phone, I understand that AA definitely has the cash on hand to make the purchase but would they be able to sustain the airline(s) going forward. They posted over a $200 million net loss last quarter, and are in the midst of renegotiating their senior credit facility with their banks of which they are going to collaterize that loan with potentially a portion of if not all of the remaining 60+ aircraft that have already not been utilized to secure further debt.

Given their financial condition, I just cannot see this happening.


User currently offlineRogerThat From United States of America, joined Dec 2003, 566 posts, RR: 0
Reply 24, posted (9 years 11 months 1 week 3 days 9 hours ago) and read 3718 times:

AA Mergers in my lifetime:
1. TWA
2. Reno Air
3. Air Cal
4. Trans Caribbean

The Best: Trans Caribbean in 1971 which brought JFK - SJU, and several other Caribbean destinations.

The Worst: TWA as has been discussed many a time in this forum.

Now when your last successful merger was almost 35 years ago, sooner or later they figure out that M&A ain't the way to go.

Save the cash for a rainy day. And its been raining cats and dogs for 3 years.



25 Post contains images RogerThat : Rare shots of Trans Caribbean. Thank you Mel Lawrence
26 Anthsaun : Things are getting out of control. It seams like the discussion is going nowhere because it is a weird idea that AA´s buys MX and AM. A statement by
27 LeoDF : Hey Anthsaun: An interesting fact about what you say of Slim. Curiously Mexicana and Sanborn's have just made a deal in which you can buy your Mexican
28 EddieDude : Not in this case; foreign entities cannot control Mexican carriers. The authorities not only enforce the 25% voting stock ownership limit, but also re
29 Post contains images FLY2LIM : I just have two words for this (if it happens) F*****N Barbaric Let's get this right. That would be "F*****G Barbaric
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
NW And AA May Fly To GNV posted Sat Jan 31 2004 00:28:17 by MAH4546
Caribbean Star May Buy AA Eagle SJU Operation posted Thu Feb 14 2002 17:26:00 by CactusA319
AA 767 Routes Domestic And International posted Wed Oct 25 2006 02:23:52 by TriJetFan1
AA, DL, HA, ATA And CO posted Sun Sep 10 2006 00:26:57 by 747400sp
AA Flights Between IAH And ORD IN 1987 posted Sat Jul 15 2006 18:10:27 by Airlinebuff77
Emirates May Buy Aer Lingus Stake posted Mon Jul 10 2006 11:02:29 by GWYIRE
Silkair May Buy 20 Aircraft. posted Fri Jun 30 2006 08:24:41 by Manni
AA's MD-80 Fleet and its future, thoughts? posted Tue Jun 27 2006 00:48:34 by Thering
Good Buy A350 And Good Luck A370 posted Wed May 31 2006 23:11:31 by ElGreco
Bombardier: India May Buy 400 RJs By 2025 posted Thu Apr 27 2006 12:56:54 by 777ER