LAXDESI
Topic Author
Posts: 2775
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No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 12:57 am

One has to assume that TPG has approached IAG about a possible joint bid. TPG, $48 billion private equity firm, had a stake in America West in the past.
http://www.bloomberg.com/news/2012-0...ke-stake-in-solid-partner-amr.html

Quote:
AMR must move quickly to secure $2 billion in cost cuts and fend off potential suitors, Chief Executive Officer Tom Horton said this month. Vazquez said yesterday that while there has been “a lot of noise” about IAG taking a stake in the third- largest U.S. carrier, that’s not an issue.

AMR, which plans 13,000 job cuts, has said it wants to exit Chapter 11 is 2012 and expects to do so independently. That would mean dodging potential bids from Delta Air Lines Inc. (DAL) and US Airways Group Inc. (LCC) David Bonderman’s TPG Capital, which like AMR is based in Fort Worth, Texas, also has studied whether to invest, people familiar with the matter have said.

IAG, formed last year from a merger of British Airways with Spain’s Iberia, is “very supportive” of AMR’s turnaround plan and “very optimistic” about the outcome, Vazquez said. He declined to say whether London-based IAG had been approached by TPG about forming a bid group.
 
aaexecplat
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 1:21 am

I must say that the comments from Vasquez are slightly shocking. His lukewarm response makes it sound like they would be content with AA failing completely if it came to that...
 
deltaffindfw
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 1:24 am

It doesn't surprise me. Can you imagine the backlash of a foreign entity bidding for "American Airlines". It would probably force the public opinion to push for DL or US to go after them.

EDIT: I'm not against IAG - I'm just expressing what I perceive as protectionist US sentiments.

[Edited 2012-02-15 17:26:01]
 
aaexecplat
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 1:36 am

Quoting deltaffindfw (Reply 2):
It doesn't surprise me. Can you imagine the backlash of a foreign entity bidding for "American Airlines". It would probably force the public opinion to push for DL or US to go after them.

EDIT: I'm not against IAG - I'm just expressing what I perceive as protectionist US sentiments.

IAG wouldn't be "bidding" for AA. All they would do is provide exit financing in exchange for a legally permissible amount of equity in the new entity.

This has happened many time over when alliance partners have bailed other alliance partners out during difficult times...
 
deltaffindfw
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 1:49 am

Quoting AAExecplat (Reply 3):
This has happened many time over when alliance partners have bailed other alliance partners out during difficult times...

Has this happened to a US carrier?

My point is that giving equity to a foreign entity is not popular in the US. And yes, it is a part of a bid. TPG is lead financier. Call it a "bid" or "exit financing" - it's all semantics. Basically, you are putting a proposal to the bankruptcy court against AA's own proposal. In essence, you are bidding on getting ownership of the company.
 
moman
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 1:53 am

There was a major outcry a few years ago when Virgin Atlantic was going to invest in a minority stake for Virgin America. They even had to hire an ex-AA VP to run the carrier just to get government approval.

Thus, I don't see an IAG investment being either beneficial or detrimental to AMR.
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EddieDude
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 3:11 am

Quoting LAXDESI (Thread starter):
TPG, $48 billion private equity firm, had a stake in America West in the past.

TPG (f/k/a Texas Pacific Group) was also part of the consortium that tried to acquire Qantas Group a few years ago.
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mogandoCI
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 3:41 am

Quoting moman (Reply 5):
There was a major outcry a few years ago when Virgin Atlantic was going to invest in a minority stake for Virgin America. They even had to hire an ex-AA VP to run the carrier just to get government approval.

Congress would do tons of unnecessary probing to see if IAG ends up with more than 25% via the backdoor known as TPG if they attempt a joint bid - especially when it's something as un-transparent as private equity.

Prolongs the BK process for no reason while giving time for DL/UA to pull ahead while AA stalls.
 
IADLHR
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 5:50 pm

Quoting deltaffindfw (Reply 2):
It doesn't surprise me. Can you imagine the backlash of a foreign entity bidding for "American Airlines". It would probably force the public opinion to push for DL or US to go after them.

I hear what you are saying. However, I wonder what the outcry would be if DL or US bought AA and there would even less competition in the US airline industry. A DL/AA or US/AA merger would, quite, likely, result in huge layoffs in the airline industry.

So, maybe, perhaps, the outcry of foreing investors in AA might, perhaps, be somewhat muted comapred to what it could be.
 
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jetjack74
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 5:53 pm

Well, this response does make it sound interesting, but I would like to interject that my previous company, NW was in the early stages of bankruptcy, we also heard nothing but the doomsday scenario in the media. They were pretty much making us out to be the company in the worst financial shape. All of which was patently untrue. While NW was certainly in the red, we had made vigorous cuts to alot of our operating costs, and were in the process of securing labor cost reductions. So this is just media hype at a time when every speculative theory is thrust into print. In the end, some investment/rescue package will be made.
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vv701
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 7:21 pm

Quoting AAExecplat (Reply 1):
I must say that the comments from Vasquez are slightly shocking. His lukewarm response makes it sound like they would be content with AA failing completely if it came to that...

In what way shocking? It is reported :

' “The management of American Airlines is leading this process and they know very well what they have to do,” Vazquez said in London. “I don’t think there’s a question from our side of disrupting any process, and they are doing very well.” '

If he and IAG management support AA's management's objectives and thinks they are ". . . doing very well" it seems to me he is being both supportive and positive.
 
LHRFlyer
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 8:52 pm

I think Antonia Vazquez is in part being political. American has made it clear it wants to restructure itself on its own and, in public, IAG is respecting that,

What IAG may have discussed in private is another matter. However, an equity stake by IAG would be challenged and it is questionable how beneficial a minority stake would be to IAG beyond its existing joint business with American.
 
Bongodog1964
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RE: No Plans To Invest In AMR: IAG

Thu Feb 16, 2012 9:33 pm

Why would IAG contemplate investing in AMR ? US airline ownership rules restrict any foreign company to a smallish stake, not enough to have any influence, but enough that you have a lot of money tied up over which you have little control.. There are far better opportunities for IAG's money in the World

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