Us Airways Hedging Its Bets

[USA320Pilot]

US Airways hedging its bets

ARLINGTON (Beaver County Times) - When troubled companies run out of bank and commercial loans and other traditional options, they are likely to turn to hedge funds, a somewhat mysterious, less-regulated version of mutual funds.

Traditionally, hedge funds represent institutions and wealthy individuals who are "savvy investors who have done their homework," Forsgren said, making the most of opportunities for higher returns in risky investments.

"These hedge funds obviously are a tremendous source of capital for people like the airlines, who have exhausted all the other commercially available sources of lending. And there is always somebody out there who will loan you money if the payback meets their investment guidelines."

As for the terms and rates of repayment, Forsgren said, "I don't know if anyone knows."

But this type of investment generally comes with a price, which might mean a hefty interest rate or loss of control.

"The more desperate you are, the more you need the money, the more strict the terms are, the higher the interest rate is, the more of the equity you kind of have to confer to them," Forsgren said.

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Regards,

USA320Pilot

 

[Twicebaked]

Can anyone say "Loan Shark"?? Not really, but it sounds like a organized professional approach to the former.

 

[delldude]

SO YOU INTIMATE WE ARE SHORT ON CASH AND MAY END UP SALVOING THE DEAL??? :mf_boff:

 

[ClueByFour]

Can anyone say "Loan Shark"?? Not really, but it sounds like a organized professional approach to the former.

[post="286521"][/post]​

It's nothing like what GECAS is getting for it's money, tho. Those guys win the BOHICA award of the century for the GECAS agreement and MOU.

 

[usair_begins_with_u]

I've been saying this all along... These hedge fund guys are the "wall street gurus" A320 has been jawaing about for the last 3 months.. With their lousy 300 million, they bought 80% of the old USair's portion of equity of the combined AWA U entity. Probably not a bad deal at that price, some sucker is bound to come along and think airlines are a great investment... See Doc Bronner.

But I digress.

The only others to invest in UAir besides the hedge fund guys were its creditors. Dont you for a second think the other airlines creditors are not going to follow suit and play the same game, see American Express/Delta. Shortly, all the "should be" liquidated airlines will propped up by their suppliers and you will have the same old situation all over again, but now they will all be even more levered. As soon as the next recession hits, in 2-3 more years if oil keeps rising, and theres going to be even a bigger crash, because the airlines and now their suppliers are going to feel it much worse because of the leverage. Why throw good money after bad?