Friday, May 11, 2012
According to Bloomberg, American Airlines (AMR) has assured its unsecured creditors committee that it will consider potential mergers as it puts together a reorganization proposal this summer. See Jeffrey McCracken and Mary Schlangenstein, AMR Said Ready to Study Sale Among Options in Bankruptcy, Bloomberg, May 11, 2012 (available here). American has exclusive rights until September to propose a reorganization plan and management had previously insisted that it intended to emerge from bankruptcy before considering any possible mergers. However, last month's news that the union groups on the unsecured creditors committee were in support of a potential takeover bid by US Airways drove speculation that the committee could move to cut short AMR management's exclusivity. Presumably, today's agreement will end that threat in exchange for AMR's agreement to explore options involving other airlines.
Thursday, May 10, 2012
Triple Five, a Canadian conglomerate, has requested financial information from Cyprus Airways as it contemplates purchasing a majority stake in the Cypriot flag carrier. See Michele Kambas, Cyprus Air Says Canada's Triple Five Eyes Stake, Reuters, May 8, 2012 (available here). While the potential deal is still in its early stages, it is unclear how the type of acquisition described in the article could be legal. Though the EU-Canada air transport agreement is relatively liberal, it only permits foreign ownership to the extent permissible by domestic regulation. As of now, the EU limits foreign ownership of community carriers to a 49.9 percent stake, and Canada, despite repeated discussions of raising the cap, still prohibits foreign ownership beyond 25 percent. That 25 percent figure would appear to be the maximum stake Triple Five could acquire under the EU-Canada agreement, as according to Annex 2, "ownership of a Party's airlines by nationals of all other Parties shall be allowable, on the basis of reciprocity, to the extent permitted by Canada's domestic laws and regulations for foreign investment in airlines." Canadian rules appear to allow for larger equity stakes, as long as voting rights and control of the carrier aren't included. However, Triple Five is unlikely to be interested in a majority equity stake without control of the carrier. The Cyprus government currently owns 69 percent of Cyprus Airways.
Monday, May 7, 2012
Last week, Danish carrier Cimber Sterling became the latest airline to declare bankruptcy. Cimber Sterling, which primarily served domestic routes within Denmark, has grounded its aircraft for now. See Ray Weaver, Cimber Sterling Goes Bankrupt, The Copenhagen Post, May 3, 2012 (available here).