Here is why I see IB
as a main contender in case of a CINTRA sale:
1. With the European consolidation taking hold in the next couple of years, IB
needs to strenghten its position. Options: (1) within Europe - (2) within LA
. European options are limited (considering cash available, balance strenght, and cultural issues) whereas LA
options will give more bang for the buck (assuming it or they will be properly managed).
2. Results within the European market are under pressure - largely due the LCC effect. At the same time, although IB
's long-haul operation 'only' generates 13% of total passengers it contributes 31% to total turnover (approximately 75% to/from LA
2. CINTRA as a whole will probably be valued somewhere between USD 300-600 million ('buy when market is down') and be walked down the isle with attractive curves and a pretty face (i.e. large degree of forgiven debt as a dowdry).
3. Considering the cash balance of IB
at the end of 2003 of Euro 940 million and their long term debt/total assets ratio of 9% they will have some realistic financing options. Even with full debt financing their Equity/Total assets ratio will stay above the - normally - demanded 25% by financial institutions.
4. With a possible change in the bilateral agreement between Mexico and the US announced in December 2004 and a future 'open skies' agreement between EU and US a lot of commercial (and strategic) opportunities will become available.
With a possible CINTRA (or at least MX
- due to route and fleet issues) acquisition, IB
might - in my opinion - smartly enhance its strategic importance within OW
and enhance shareholders value. In addition it might seriously frustrate ST
's position (when sold as a whole). It is possible that the recent remarks by IB
's CEO were intended to 'test the waters.'
Who else is in a position and would have the resources to take advantage of this opportunity??