A secretive Arizona investment group's plan to
outbid American Airlines and buy Trans World Airlines Inc. is
drawing chuckles from some industry analysts.
Many questioned Thursday whether Scottsdale-based Jet
Acquisition Group Inc. will actually follow through with its bid to
beat out AMR Corp.'s American Airlines and take TWA out of
bankruptcy.
Others wonder why the group is being so cagey about its
investors and money source.
"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."
In releasing a statement on Wednesday that it plans to offer $1
billion in cash for TWA, more than doubling American's bid, Jet
Acquisitions said it wants to preserve TWA as an independent
airline, retain most of its employees and eventually expand TWA,
which last month filed for bankruptcy for the third time in a
decade.
But spokesmen for the group refused to 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."
Rick Manter, a spokesman for Jet Acquisitions, said Thursday the
group thought it unwise to release any more information until it
made its bid sometime around 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. I think the proof is in the pudding."
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 banking
and aviation backgrounds.
One reported partner is Scottsdale attorney Stanford E. Lerch,
who claims to have previously worked on the bankruptcy cases of
America West Airlines and Continental Airlines.
His office would not elaborate, and calls to America West and
Continental officials about the cases were not immediately returned
Thursday.
Lerch's office also said he would not comment on anything
related to Jet Acquisitions' bid, citing confidentiality rules
during the bidding process.
The State Bar of Arizona said its records show Lerch was born in
1933, attended the University of Arizona law school in Tucson and
became a lawyer in 1961. Bar officials could not immediately find
any record of Lerch facing disciplinary action.
Representatives of American and TWA downplayed news of the
offer.
"Anyone is free to bid," American spokesman John Hotard said.
"The point of the auction process is to allow higher and better
offers to come forward," TWA spokeswoman Julia Bishop-Cross said.
Michael Boyd, president of the Boyd Group consulting firm in
Evergreen, Colo., said that someone with $1 billion to buy St.
Louis-based TWA would have already made an offer instead of putting
out a press release announcing a planned bid.
Manter said the press release was issued to make it clear that
there is another serious bidder.
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.
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 startup 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 startup 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 also awaiting approval of federal
regulators.
