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Analysts Skeptical of New Bid for TWA
By Walter Berry   Associated Press
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PHOENIX — 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.

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