US Airways says it has been approached by investors and equity firms eager to be part of its potential bid for American Airlines.
In an interview Wednesday, US Airways Chief Financial Officer Derek Kerr said that if the carrier makes an offer for American's parent company, AMR Corp., it would not be contingent on financing.But if it needs cash for the merger, it has access to it."We have people knocking down the door trying to be a part of this transaction, if we need to raise cash for the transaction," Kerr said.One of those could be TPG, a Fort Worth private-equity firm. According to a Reuters report, TPG and US Airways are considering a joint bid for AMR, which filed for bankruptcy protection in November."A partnership with TPG could boost a US Airways bid for its larger rival in several ways," the article said, quoting unnamed sources. "It could give the carrier more financial flexibility, including the ability to pay some AMR creditors in cash."TPG and US Airways declined to comment on a possible partnership.Kerr cautioned that US Airways has not made a formal offer for American, which has the exclusive right to present a restructuring plan to the Bankruptcy Court until September."We haven't done due diligence. We haven't gone through all of their debt instruments and things like that," Kerr said. "Today, we don't believe we have to go out and raise cash, but if we do have to go out and raise cash, we do have a fair amount of people that will come forward and be a part of the transaction."Fort Worth-based American also declined to comment on a possible TPG-US Airways partnership, instead reiterating comments made last month by its treasurer, Beverly Goulet."It is best for all that this process be very clear so that we are not distracted or diverted by anything that does not serve the best interests of all our company's financial and other stakeholders," Goulet said May 11."To be clear, American has committed to work in collaboration with the [unsecured creditors] committee to develop only potential consolidation scenarios, and this agreement does not in any way suggest that a transaction of any kind or with any particular party will be pursued."Although reports have surfaced this year of possible bidders for American, including TPG and Delta Air Lines, US Airways is most often mentioned as a merger partner.In April, the Tempe, Ariz.-based carrier announced that it had reached conditional labor agreements with American's three largest unions, which are supporting a possible merger.It is also talking to bondholders and creditors, presenting a plan that would create $1.2 billion in savings if the two airlines merged.TPG, formerly known as Texas Pacific Group and operating from Fort Worth and San Francisco, could also be either a financing source for American's stand-alone restructuring plan or a possible bidder. The firm was founded in 1993 when partners Jim Coulter and David Bonderman bought Continental Airlines out of bankruptcy.The firm has a history of investing in distressed airlines, including Tiger Airways, Ryanair Holdings, Midwest Air Group and America West Airlines, which is now part of US Airways. In 2009, TPG offered to partner with American to make a $1.1 billion investment in Japan Airlines when the Asian carrier was struggling financially.Separately, AMR disclosed in a Thursday court filing that it recorded a net loss of $142 million in April, with half coming from bankruptcy restructuring expenses.During the bankruptcy process, AMR is required to file monthly financial reports with the court.AMR also said that its mainline carrier, American Airlines, had passenger revenue of $1.5 billion while its regional affiliates, including American Eagle, generated $251 million. Total revenue for the month was $2.04 billion.The company also spent $53 million on aircraft financing renegotiations and rejections, and $22 million on professional fees, the filing said.Andrea Ahles, 817-390-7631Twitter: @Sky_TalkHave more to add? News tip? Tell us
