Bidding war starts for US Airways By Barbara De Lollis, USA TODAY An Alabama pension fund kicked off a bidding war for US Airways with its offer to top Texas Pacific Group's offer and bid higher if needed. On Thursday, the Retirement Systems of Alabama filed its bid with the bankruptcy court in Alexandria, Va., offering to pay $240 million for a 37.5% stake in the restructured airline once it emerges from bankruptcy reorganization. US Airways announced that Texas Pacific Group agreed to invest $200 million when the airline filed for bankruptcy protection on Aug. 11. "If it gets into a bidding contest, I'm not going to walk away," says pension fund CEO David Bronner. The fund upped the ante by agreeing to forgo fees, which would save US Airways as much as $10 million, he says. In a statement, US Airways confirmed receipt of a letter from the Alabama pension fund but would not elaborate. The company asked the bankruptcy judge to approve the rules governing the bidding process next week. Texas Pacific Group CEO David Bonderman did not return calls seeking comment. The Alabama pension plan, which has $25 billion in assets, is a large US Airways creditor with $340 million in debt backed by aircraft and equipment. Part of the attraction of the bid is the chance to salvage the fund's investments, Bronner says. But he also thinks the pension fund can make a profit. If the airline industry recovers and US Airways' restructuring succeeds, Bronner says the investment could be worth more than $1 billion in five years. "We see long-term potential (and) a superb management team with (CEO) David Siegel," he says. "The problem with US Air has been its costs." The airline is more than halfway to its goal of cutting costs by more than $1.2 billion a year for 6 1/2 years to qualify for a $900 million federal loan guarantee. The loan board has given the airline conditional approval. Earlier this week, the airline's mechanics and its gate, reservation and ticket agents became the last two of its unions to approve wage and benefit cuts, giving the airline $850 million a year in annual savings from its employees. US Airways is negotiating more cuts from lessors, lenders and vendors but stands by its commitment to keep flying at least 245 large jets. "There's going to be lots of goodies on the table from this restructuring," Bronner says. "Why should those goodies go to some rich guys in Texas compared to public employees?" The fund, which manages retirement money for about 280,000 teachers, police, firemen and other public employees, was hit hard by corporate scandals this year. It lost about $70 million from its Enron holdings and about $300 million from WorldCom holdings, Bronner says. Aviation consultants and other US Airways creditors predict the pension fund won't be the last interested investor. "There's a whole bunch of characters out there who can't resist a $240 million price tag for a restructured US Airways," says airline consultant Mo Garfinkle. Jack Hersch, partner at hedge fund Cypress Management, which owns US Airways debt, says the price on the airline will rise "as people realize that US Airways is not going away." The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (ReadyMix) http://www.readymix.co.tt/ (ReadyMix Cement Ltd) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************