Friday, February 9, 2001
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Posted on: Friday, February 9, 2001

Offer for TWA met with doubt

Associated Press

PHOENIX — Analysts expressed skepticism yesterday that an Arizona investment group’s planned $1 billion cash offer for Trans World Airlines Inc. will succeed, saying AMR Corp.’s American Airlines still has the best offer on the table.

Scottsdale, Ariz.-based Jet Acquisitions Group Inc., whose proposed offer is more than double that of American’s, said it wants to preserve TWA as an independent airline, retain most of its employees and eventually expand the St. Louis-based carrier, which last month filed for bankruptcy for the third time in a decade.

But spokesmen for the group have declined to identify its investors or source of money and will not discuss specifics.

"They could be protecting some investor who in the past hasn’t been that credible," said Mike Linenberg, an analyst with Merrill Lynch in New York. "Nobody knows yet who’s behind this offer. If it’s a nobody, it probably won’t fly."

Including the assumption of $3.5 billion in lease obligations and $1.7 billion that would be spent on expanding TWA’s fleet, the total value of Jet Acquisitions’ offer would be $6.2 billion.

Rick Manter, a spokesman for Jet Acquisitions, said yesterday the group thought it unwise to release any more information until it made its bid sometime near a Feb. 28 bidding deadline set by a federal judge.

"It’s unusual to introduce any more information than necessary until a bid is delivered. It jeopardizes your bidding status," Manter said. "As far as we’re concerned here, either you have the money or you don’t. This group is prepared to put up $1 billion as a guarantee."

Manter would only say that the group included an investor who controls more than $1 billion in assets, another who has invested in several airlines, and representatives with significant bank and aviation backgrounds.

The secrecy puzzled analysts.

"Any group wishing to make a bid for a company usually discloses its principals and financial backing to give it credibility," said Julius Maldutis, an airline analyst with New York-based CIBC World Markets Corp. "We have none of that with this group, and that’s odd."

Michael Boyd, president of the Boyd Group consulting firm in Evergreen, Colo., said that someone with $1 billion to buy TWA would have already made an offer instead of putting out a press release announcing a planned bid.

"Airline bankruptcies smoke out a lot of squirrels, alleged experts who think they can pick it up cheap and make it work," said Boyd. "But TWA is not something of great value to anyone other than American Airlines. This offer from Jet Acquisitions — whoever they are — doesn’t pass the smell test in my opinion."

Manter said the press release was issued to make it clear that there is another serious bidder.

American’s complicated bid to buy TWA includes the acquisition of parts of US Airways Group Inc. from UAL Corp.’s United Airlines and a large stake in a new start-up carrier for $1.8 billion in cash and $3.5 billion in lease obligations.

American, based in Fort Worth, Texas, has said it would pay $500 million for most of TWA’s assets, including up to 190 planes and the St. Louis hub.

American also would pay $82 million for a 49 percent stake in DC Air, a minority-owned start-up being created as a result of the United Airlines-US Airways combination that would serve 44 markets out of Washington’s Reagan National Airport.

All of the airplane deals are awaiting approval of federal regulators.

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