PIT Tribune Review: Bronner Interviewed

C

chipmunn

Guest
Alabama fund is only bidder for US Airways
PITTSBURGH (Tribune Review) - US Airways did not attract any other suitors looking to buy a major stake in the bankrupt airline, so it is moving forward with previously announced plans for a government pension fund in Alabama to purchase a 38 percent share of the airline for $240 million.
The Retirement Systems of Alabama, a $25 billion pension fund for public employees with a history of high-profile investments, is betting that the airline, which lost $2.1 billion in 2001, will be a moneymaker when it emerges from bankruptcy protection next year.
In September, US Airways accepted the pension fund''s offer over a previous bid from Texas Pacific Group, a venture capital firm that offered $200 million for an identical 38 percent share.
The bankruptcy court had given outsiders until Friday to outbid the pension fund, but US Airways confirmed Monday that no other bidders made an offer.
David Bronner, who directs the Alabama fund, said he was not surprised that nobody else made a bid because he had made it clear that he would outbid anyone who made an offer. Several unidentified investors made inquiries but did not submit a formal offer.
He also said the rapid pace of US Airways'' restructuring gave other bidders a limited time frame to evaluate a potential bid.
We got into the process relatively late ourselves, so anybody who would have got in after we did would be really late, he said.
The deal must still receive final approval from the bankruptcy court. Before that happens, US Airways will have to submit a revised restructuring plan that implements annual cost savings of $1.4 billion to $1.6 billion a year.
The airline had previously said it would need to cut costs by $1.2 billion annually, but revised that figure in October because of continued weakness in the airline industry caused by higher fuel costs and the threat of war with Iraq, among other issues.
The airline said yesterday it will submit a new reorganization plan in mid-December. It already has identified $1.3 billion in cost cuts, mostly through renegotiated labor contracts. The airline, the nation''s seventh largest, is in the midst of furloughs that will reduce its work force by roughly a third from its pre-Sept. 11 level of 46,000. Flight schedules have also been reduced.
Bronner acknowledged that the airline needs to find a way to further cut costs, but said he was confident that would happen and that he''s as enthusiastic about US Airways as he was when he made the initial offer in September.
They should be able to develop a viable plan, he said. They''ve got a good management team, an excellent staff...But they will have to bring to the table in December a plan that''s different than the plan they submitted in September because the situation has gotten worse.
US Airways spokesman David Castelveter said the fact that nobody made a bid to compete with the Alabama fund does not indicate anything negative about the airline''s prospects.
We feel we made the right choice in selecting the Alabama fund, Castelveter said.
 

usfliboi

Veteran
Aug 20, 2002
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Sounds like bonner is very happy with investment. Obviously hes not too concerned ! I think if he was extremely worried about not retaining loan etc, i think we would all know about it! I think we all need to take some steps back let whats gonna happen happen.. All the worrying and the sky is falling crap doesnt help! The man isnt worried so when he shows signs , we will know about it!
 

autofixer

Veteran
Aug 20, 2002
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www.usaviation.com
Not to rain on anyone's parade here, but the fact that there were no other bidders would concern me.

Didn't someone theorize that there would be a bidding war for U? I guess all of the eggs are in one basket.
 

Dea Certe

Veteran
Aug 20, 2002
889
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autofixer,

I believe the article quoted Mr. Bonner as saying he would out-bid any other offers. That might have cooled a few jets.