NEW YORK - Global Airlines Corp. had "no assets" when the company offered to buy US Airways Group Inc. for $10 billion and Trans World Airlines Inc. for $298 million, the Securities and Exchange Authority claims.
The SEC filed a civil suit against closely held Global and its chairman, Emil Bernard, seeking to block them from making similar offers in the future.
"Global did not have the means to purchase either airline by tender offer or otherwise, as it had no assets or resources," the SEC said in a fraud complaint filed yesterday in federal court in New York.
US Airways Group, the seventh-largest U.S. carrier, exited bankruptcy yesterday with a $1 billion loan, largely backed by the U.S. government, and a plan to purchase 100 new, small jets to spur growth. Bankrupt TWA was bought in 2001 by American Airlines parent AMR Corp., which itself is now seeking to avoid bankruptcy.
Bernard, 50, is Global's sole shareholder, the SEC said. He lives in Clifton, N.J. In 2000 and 2001, Global's address was a Manhattan post office box. Neither Bernard nor Global could be immediately reached for comment yesterday.
In 2001, Global offered $10 billion in cash, stock and assumed debt for US Airways, sending US Airways shares higher. The Arlington, Va.-based carrier twice said Global's bid wasn't credible, as Global declined to identify the source of its funding.
The SEC quoted an August 2001 interview of Bernard with Bloomberg News, in which he said Global had $750 million "lined up already for the cash portion. The source of the money is other private investors and other companies who might be suppliers in this transaction."
A year earlier, Global offered to buy TWA for $298 million, prompting "a rapid increase in the price and volume of TWA shares," the SEC said.
The suit seeks undetermined damages and an injunction.