Group Including BA Reportedly Interested In Carrier
It's almost unfathomable... and may be illegal, in the eyes of
the Department of Transportation. But that hasn't stopped rampant
speculation on the news American Airlines may soon be the target of
a private buyout bid, by a group including investment firm Goldman
Sachs and British Airways.
Business Week cited unnamed sources in its brief report
Thursday. Several airline analysts discounted the story, stating
any such acquisition of the world's largest airline in terms of
passenger-miles flown would almost certainly fail to pass muster
with the US government.
"While anything is possible in this high liquidity world of
private equity, we're skeptical that this story has merit," Morgan
Stanley analyst William Greene told the Associated Press.
According to the Business Week report, the buyout group plans to
bid soon on American's parent company AMR, to the tune of between
$46 and $52 per share. That translates to a total bid somewhere
around $10.5 billion -- and would amount to a significant premium
over AMR's closing price Thursday of a nickel over $38, said Tulsa
AMR spokesman Tim Smith
did little to quell rumors.
"We won't speculate on what our potential role -- if any --
might be," Smith said. "If it becomes appropriate to comment
further, we will do so."
A spokesman for British Airways declined to comment to the
Associated Press. Goldman Sachs officials didn't return phone
Doubting analysts cited several factors in downplaying the
buyout reports -- including American's high debt load, and sheer
size of operations. The most significant strike against such a
merger, though, is the US government's attitude towards foreign
ownership of domestic airlines.
As Aero-News reported, the
DOT tentatively denied an application for an operating license by
upstart low-cost carrier Virgin America in December. In its
refusal, the DOT noted Virgin America would have to revise its
ownership, corporate structure and associated agreements to be 75
percent-owned and actually controlled by US citizens before it
could receive an operating certificate.
Virgin revised its ownership and resubmitted its application in
January. The verdict is still out for that carrier...
which is considerably smaller than American.