Continental Airlines entered into Chapter 11 proceedings in Houston in
December, 1990. It has the unique distinction of being the only U.S.
airliine to emerge from bankruptcy twice. It's been very successful
this second time.
As it appeared that Continental's plan for reorganization would be
successful, new bidders emerged suddenly. On Oct. 5, 1992, the Wall
Street Journal published an article "Continental Airlines' Happy
Dilemma: Bounty of Suitors --- Carrier's Progress Since Bankruptcy-Law
Filing Yields Five Buy-Out Offers" that detailed five bidders before
the court:
1. $350M bid by Maxxam Inc., tentatively approved by Continental's
board of directors.
2. $385 million bid from Mexican investor Alfredo Brener
3. $400 million bid from Air Canada and a pair of U.S. investors
4. $400M bid from Lufthasa and Marvin Davis, an LA financier who owns
the Oakland Raiders
5. $425 million bid from Benefits Concepts and two former Continental
managers. This one was considered to be a "long shot" because of the
small amount of equity involved.
As the bidding continued, the price went up. On Nov. 3 the Seattle
Times notes that Lufthansa dropped out, citing "its review of
Continental's financial, legal and operational status." Note too that
Lufthansa had lost money in 1992.
Air Partners/Air Canada eventually raised their bid to $425 million,
then $450 million. On Nov. 10, 1992 the Wall Street Journal notes
that the Canadian bid "shouldered aside an offer" from Houston
investor Charles Hurwitz of Maxxam and Aerovias de Mexico (commonly
known as AeroMexico).
It might be worth noting that even the Air Canada bid had to skirt
rules thresholds for foreign ownership, limiting foreign owners from
having more than 25% control of operating decisions and 49% for
ownership decisions.
Google search strategy:
I used Google on the Continental Airlines web pages to establish key
dates, then used Proquest to search Wall Street Journal and other
newspapers:
Continental Airlines Air Canada
Proquest is not freely available on the Internet, but many public
libraries have access to full-text articles of newspapers back to
1986. It was the fastest way to pin down this account.
Incidentally, I also went back to "Hard Landing," the excellent book
on airline deregulation by Thomas Petzinger, Jr. Unfortunately
Petzinger's graphic account of the airline industry ends before
Continental's entry into its 2nd bankruptcy.
Best regards,
Omnivorous-GA |
