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KlimaBXsst
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Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 8:35 pm

Which private equity firms in the US seem to have success at turning around and white knight salvaging and saving airline companies in distress?

I can only think of private equity firms that have failed, rather than succeeded. I am looking for private equity firms or capitalists which have succeeded turning around an airline for its employees. With current airline events I really feel this is important.
 
TexasAirCorp
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 8:43 pm

Continental was saved in 1991 by a consortium lead by TPG
 
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Polot
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 8:43 pm

Indigo Partners…twice. First with Spirit then Frontier.

Although “distressed” might be a little extreme, neither were in a good place when Indigo Partners stepped in.
 
vegasplanes
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 8:59 pm

TexasAirCorp wrote:
Continental was saved in 1991 by a consortium lead by TPG


TPG was also involved with the HP rescue from Ch. 11 in '93, led to a brief code-share of sorts arrangement with CO.
 
KlimaBXsst
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 9:21 pm

I do seem to remember some Eastern Air Lines Shuttle employees careers being saved and managing to end up with US Airways. I just cannot see to remember how all that happened.
 
TexasAirCorp
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 9:25 pm

KlimaBXsst wrote:
I do seem to remember some Eastern Air Lines Shuttle employees careers being saved and managing to end up with US Airways. I just cannot see to remember how all that happened.


This might jog your memory:

Image
 
mga707
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 9:27 pm

KlimaBXsst wrote:
I do seem to remember some Eastern Air Lines Shuttle employees careers being saved and managing to end up with US Airways. I just cannot see to remember how all that happened.


Assume you know very well that a, oh, somewhat controversial person with the initials DJT was in the picture between Eastern and US Airways.
Last edited by mga707 on Fri Aug 06, 2021 9:30 pm, edited 1 time in total.
 
FURUREFA
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 9:29 pm

Polot wrote:
Indigo Partners…twice. First with Spirit then Frontier.

Although “distressed” might be a little extreme, neither were in a good place when Indigo Partners stepped in.


Having spent time with the Indigo team, I'd argue they're a very specific case that has strong, embedded industry knowledge.

The reality is that most of the time that traditional private equity has tried to invest in US airlines it hasn't gone well - airlines are different than your traditional industrials businesses (industrials covers transportation at these firms). Doesn't seem like Sun Country has done so well for Apollo, and jury is obviously out on Bain Cap and Virgin Australia.
 
CATIIIevery5yrs
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 9:44 pm

I think I see the point of this thread and I have to say, Spirit doesn’t need private equity to solve an operational meltdown. They make and have plenty of bread. They need better execution. You can hire folks for that you don’t have to take the company private.
 
KlimaBXsst
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 10:14 pm

TexasAirCorp wrote:
KlimaBXsst wrote:
I do seem to remember some Eastern Air Lines Shuttle employees careers being saved and managing to end up with US Airways. I just cannot see to remember how all that happened.


This might jog your memory:


https://www.washingtonpost.com/archive/ ... 351124d0a/

ah yes Frank Lorenzo sold the assets of Eastern Airlines when he was in control of Continental before TPG. Strange how familiar faces show up sometimes. I only can wish more of Eastern's employees jobs could have been saved.
 
UpNAWAy
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 10:18 pm

TPG is easily the big success story of outside investors. Speaking of radically transforming an airline could one even imagine what an Elon Musk run airline would look like? If he bought a major, I bet in a year he would have changed well over 50% of SOP, because he wouldn't settle for "We have always done it that way"!
 
chrisair
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 10:46 pm

UpNAWAy wrote:
Speaking of radically transforming an airline could one even imagine what an Elon Musk run airline would look like?


It'd have a balance sheet loaded up with Bitcoin and Dogecoin.
 
sxf24
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 11:07 pm

FURUREFA wrote:
Polot wrote:
Indigo Partners…twice. First with Spirit then Frontier.

Although “distressed” might be a little extreme, neither were in a good place when Indigo Partners stepped in.


Having spent time with the Indigo team, I'd argue they're a very specific case that has strong, embedded industry knowledge.

The reality is that most of the time that traditional private equity has tried to invest in US airlines it hasn't gone well - airlines are different than your traditional industrials businesses (industrials covers transportation at these firms). Doesn't seem like Sun Country has done so well for Apollo, and jury is obviously out on Bain Cap and Virgin Australia.


Indigo Partners is undeniably the most successful airline investor with a pretty impressive track record at starting and turning airlines around.

Apollo has done incredibly well with Sun Country’s IPO.

UpNAWAy wrote:
TPG is easily the big success story of outside investors. Speaking of radically transforming an airline could one even imagine what an Elon Musk run airline would look like? If he bought a major, I bet in a year he would have changed well over 50% of SOP, because he wouldn't settle for "We have always done it that way"!


Really? Outside of Continental, which was a success, TPG’s other notable airline investment was Midwest. We all know how that turned out.
 
jbs2886
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Fri Aug 06, 2021 11:42 pm

This is a really interesting question - I think one of the key differences is that aviation is fundamentally a unique industry and private equity's regular playbooks just don't apply. It requires investment, but not over-burdening with debt. Indigo Partners seems to be the preeminent firm in this business. As noted, Sun Country may be looking good and I'm curious how WestJet, Flair, and Virgin Australia turn out.
 
FlyingElvii
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 12:50 am

UpNAWAy wrote:
TPG is easily the big success story of outside investors. Speaking of radically transforming an airline could one even imagine what an Elon Musk run airline would look like? If he bought a major, I bet in a year he would have changed well over 50% of SOP, because he wouldn't settle for "We have always done it that way"!

Lol…
And then Musk learns what the term “FAA” means.
 
heavymetal
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 1:55 am

FURUREFA wrote:
Polot wrote:
Indigo Partners…twice. First with Spirit then Frontier.

Although “distressed” might be a little extreme, neither were in a good place when Indigo Partners stepped in.


Having spent time with the Indigo team, I'd argue they're a very specific case that has strong, embedded industry knowledge.

The reality is that most of the time that traditional private equity has tried to invest in US airlines it hasn't gone well - airlines are different than your traditional industrials businesses (industrials covers transportation at these firms). Doesn't seem like Sun Country has done so well for Apollo, and jury is obviously out on Bain Cap and Virgin Australia.


What makes you say Sun Country hasn’t done well for Apollo?
 
Salukipilot
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 2:14 am

FlyingElvii wrote:
Lol…
And then Musk learns what the term “FAA” means.


Oh I believe he knows....he's already finding out the hard way :lol:
 
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NameOmitted
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 2:20 am

JP Morgan did well with Jet Blue, and Wexford Management LLC has done well with Frontier.
 
LCDFlight
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 2:51 am

jbs2886 wrote:
This is a really interesting question - I think one of the key differences is that aviation is fundamentally a unique industry and private equity's regular playbooks just don't apply. It requires investment, but not over-burdening with debt. Indigo Partners seems to be the preeminent firm in this business. As noted, Sun Country may be looking good and I'm curious how WestJet, Flair, and Virgin Australia turn out.


That’s correct IMO. There is a long list of people saying the airlines “don’t understand how to run a business.” Meanwhile, running an airline is actually really hard, and only experts tend to have any notable success with it. Airlines can go bankrupt with a safety issue… a terror attack… a fuel crisis… Union labor action… demand crisis such as SARS or Covid. And that’s if you get the strategy correct. If your strategy is dumb then you go bankrupt even without any of the above. Oh, and your competitor can fly capacity into your best market and take your lunch money! It is a wonder that airlines work well at all. There are a million ways to go bankrupt.
 
UpNAWAy
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 2:57 am

Musk is actually forcing the FAA to reform and modernize, how many airlines have done that?
 
KlimaBXsst
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 11:31 am

NameOmitted wrote:
JP Morgan did well with Jet Blue...


JetBlue was a distressed, in trouble, or close to bankruptcy carrier at one time? Would love some elaboration on JP Morgan’s rescue package....
 
jetlanta
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 2:39 pm

Apollo has given Sun Country the resources and leadership it needed to completely transform the carrier. Without Apollo, SY probably wouldn't be here today.
 
iAvgeek737
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 3:40 pm

jetlanta wrote:
Apollo has given Sun Country the resources and leadership it needed to completely transform the carrier. Without Apollo, SY probably wouldn't be here today.


IIRC before Apollo stepped in didnt SY management at the time say something like "We have no future" or "Its unlikely we survive as an independent carrier". I remember reading that somewhere a while ago but I cant recall if its true
 
MIflyer12
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 5:56 pm

Are people talking about active management, or just supplying DIP financing? B6 wasn't even that.
 
KlimaBXsst
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 7:30 pm

Sun Country does seem to be standing the test of time, with 9/11, Covid, Petters management, and knock down drag out Legacy and ULCC competition.

Maybe Apollo got lucky.
 
jbs2886
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Re: Which private equity firms have successfully turned around US airline companies in distress?

Sat Aug 07, 2021 8:16 pm

MIflyer12 wrote:
Are people talking about active management, or just supplying DIP financing? B6 wasn't even that.


Active management. Private equity does a lot of financing, in bankruptcy and otherwise.

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