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Texas Pacific Group, the Fort Worth-based private capital firm ($20 billion worth) with arms in San Francisco and London, has made a roughly $8.5 billion takeover move for Aussie Qantas Airways in tandem with the Australian merchant bank Macquaried Bank, Ltd., as reported in the Wall Street Journal. The offer would value the airline at $8.5 billion. Some analysts, however, question whether the takeover bid will be successful.
Airlines are funny things. They have jumbo fixed costs, brutal exposure in economic downturns and almost never generate profit fat, making them bad long-term investment bets, though you can score big by speculating. And shrewd Qantas might not be such a bad bet. The airline famously leveraged Airbus on its upcoming and foundering A380 Mobyjet when it beefed up its initial firm order of a dozen blubber birds by eight for a total of 20 just after Virgin Atlantic Airways postponed its order of six A380s. Beauty.
And Texas Pacific Group is no stranger to the airlines. Famous for groping companies other investors won't even leer at, Texas Pacific's very first deal was a $65 million stake in bankrupt Continental Airlines in 1993. The firm then sunk $200 million into US Airways Group after it filed for bankruptcy in 2002.
US Airways went on to perform $1.5 billion coitus with America West last year and the combined airline is now making a bid for bankrupt Delta Air Lines to create one of the largest airlines on the globe. Ain't the mile-high club fun when you have nine figures to play with? --Mark Stuertz