Potential investors look at US Airways' books

Ala. pension fund says others are interested, too

October 19, 2002|By Robert Little | Robert Little,SUN STAFF

Some potential new investors are expected to scour the books at US Airways next week, possibly sparking a bidding war for a controlling stake in the troubled airline.

US Airways officials say no formal overtures have been made, but the head of a pension fund that is trying to buy a 37.5 percent stake in the company said he has been told that "a few new bidders" were invited to review financial statements in preparation for possible offers.

"I don't have any indication how serious they might be, but they're interested enough to take a good look," said David Bronner, chief executive officer of the Retirement Systems of Alabama.

US Airways filed for bankruptcy protection in August and soon struck a deal with the corporate buyout firm Texas Pacific Group, granting a controlling interest in the company for $200 million. Bronner's $25 billion pension fund trumped that offer with a promise of $240 million and a $500 million loan for use during bankruptcy.

The Alabama fund's offer was approved by a bankruptcy judge Sept. 26, but the court also granted 50 days during which competing offers could be made. Airline officials won't speculate on the prospect of a competing bid, except to point out that the 50 days aren't up.

"We expect, as part of this process, that there could be other interested parties, and they can review the same information that [the other groups] did," said US Airways spokesman David Castelveter. "But no one has submitted a bid."

US Airways was considered a troubled company even before the terrorist attacks of Sept. 11, and it lost $2.1 billion last year during the darkest financial period in the history of commercial aviation. But since then, under new management, the airline has emerged as somewhat of a hot commodity, even in bankruptcy.

Airline officials renegotiated labor contracts to trim $900 million in annual expenses and restructured airplane leases to save about $30 million more. They secured a $1 billion federal loan guarantee and expect the airline to emerge from bankruptcy early next year.

Bronner said he expects the newly streamlined company to be a top performer.

"It's a cyclical industry that's about as far down as it can go, unless there's a war," Bronner said. "And management has a good plan in place. It was an opportunity we couldn't resist.

"We'll see if anyone else really shows up," he said. "It's a pretty expensive show-up, with all the lawyers and investment bankers you have to take along."

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