When Private Equity Meets the Airline Business
It is notoriously tough to make money in the airline business, but that hasn’t stopped some of America’s biggest investors (Donald Trump, Warren Buffett, Carl Icahn) and private-equity firms to take a crack at it. As our Deal Journal colleagues reported today, Delta Air Lines and private equity firm TPG Capital are separately assessing possible bids for American Airlines.It’s not the first time private-equity has tried to play airline owner, but the forays haven’t always worked out. Here’s a select look at their track record in the sometimes un-friendly skies.
United Airlines/Coniston Partners
n the late 1980s — when private-equity firms were still called corporate raiders– Coniston Partners scooped up a large block of stock in UAL, the parent company of United Airlines, and then threatened to take over the board as a way to pressure to the company to put itself up for sale. Coniston instead in 1990 teamed up with three unions to propose a buyout of the company. The takeover siege ended, and Coniston dissolved in 1990.
Northwest/Al Checchi, Fred Malek et al.
An investor group including Frederic Malek, the former chief executive of Marriott, in 1989 was among a host of bidders who wanted to buy Northwest. (Others included Marvin Davis, the industrialist.) The Malek group won the bidding in 1989 for about $3.65 billion. The new Northwest owner had to sell off Northwest aircraft and real estate to pay for the deal, and following several unprofitable years Northwest squeezed its unions for cost-cutting concessions. Northwest agreed to sell the company to Delta in 2008.
Continental and America West/TPG Partners
TPG partners James Coulter and David Bonderman in 1992 teamed up with Air Canada to buy a majority of Continental out of bankruptcy for $450 million. Bonderman and Coulter in 1994 then led a separate deal to buy about one-third of America West out of bankruptcy court.
Air Canada/Cerberus
In 2004, Air Canada accepted a proposal from private-equity firm Cerberus Capital to invest 250 million Canadian dollars for securities convertible into a 9.2% stake in the airline. Cerberus snuck into the investment after Hong Kong investor Victor Li pulled out of a similar deal with Air Canada after the airline’s unions refused to negotiate changes to their pension plans.
Deal Journal is an up-to-the-minute take on the deals and deal makers that shape the landscape of Wall Street, including mergers and acquisitions, capital-raising, private equity and bankruptcy. In short, wherever money changes hands. Deal Journal is updated throughout each trading day with exclusive commentary, analysis, data, news flashes and profiles. The Wall Street Journal’s Shira Ovide is the lead writer, with contributions from other Journal reporters and editors. Send news items, comments and questions to stephen.grocer@wsj.com.
A Wall Street Journal analysis of mergers & acquisitions, bankruptcy, private equity and the markets.
RESILIENT MEDIA ENTERTAINMENT Sharing News/Information 25/8 About: #PRIVATEEQUITY #VENTURECAPITAL
#HEDGEFUNDS #INVESTMENTBANKING & a few fun things as well.
Check US OUT:
http://on.fb.me/vch6FQ
http://linkd.in/oiB29l
http://on.fb.me/sdaWqc
http://bit.ly/uhH9hQ
http://bit.ly/trKLuj
#PrivateEquity,#HedgeFunds,#VentureCapital,#InvestmentBanking#CapitalMarkets,#Mergers&Acquisitions,#WallStreet, Resilient Media Entertainment
http://goo.gl/d5gJK
No comments:
Post a Comment
WHAT SAY YOU?