The largest shareholder of US Airways Group said yesterday that it will open talks with management on ways to boost the company's stock price, including the airline's sale or merger with another carrier.
Tiger Management LLC of New York owns 22.4 percent of Arlington-based US Airways, or 16.5 million shares. Tiger is a hedge fund--a sophisticated investment vehicle that caters to wealthy clients--managed by the well-known Wall Street investor Julian H. Robertson Jr.
US Airways stock, which has been depressed, rose sharply yesterday, up $2.87 1/2, or 8 percent, to close at $38.50. The shares closed at a 52-week low on Friday.
The hedge fund stressed in a filing with the Securities and Exchange Commission that it supports current management, led by Chairman Stephen M. Wolf and President Rakesh Gangwal. In the SEC filing, Tiger said it believes "the market valuation of the company's common stock does not properly reflect the intrinsic value of the business based on the strength of the company's franchise and current business position, its strong management team and strategic plans."
Tiger spokesman Frasier Seitel said that the fund "has got great faith in US Airways management" and that "the only thing they are not in agreement on is the price of the stock."
A US Airways spokesman said the company would have no comment.
Seitel said Tiger could not officially hold direct talks with US Airways management until it filed yesterday's Form 13D with the SEC. Tiger had previously filed a Form 13G, which is for passive investors that do not try to influence management.
Raymond F. Neidl, an analyst with ING Barings in New York, said all airline shareholders are dissatisfied with the price of airline stocks. With Tiger having invested so much in US Airways, Neidl said, he can understand the fund's frustration. Wall Street professionals have speculated that Tiger is having a rough year.
US Airways stock in particular has been depressed because of its recent announcement that its earnings would not meet analysts' projections.
Neidl said he doubts that a sale or merger of US Airways is possible now, but Tiger may be laying the groundwork for a deal later if regulators become more amenable to mergers in the industry. "The current political winds wouldn't allow that, but that could change down the road," Neidl said.
Tiger is "currently exploring and may explore from time to time in the future a variety of alternatives designed to enhance shareholder value," the SEC filing said. "The alternatives may include, without limitation, an extraordinary corporate transaction, such as merger, sale or recapitalization of the company."
The filing added that there is no assurance that the fund will attempt to influence any of those alternatives, and that the fund "has no present plans to influence or change the structure or composition of the company's board of directors."
The fund "may also sell all or part of the shares of common stock in open market or privately negotiated transactions."
The fund bought the shares in 1996 at a total cost of $450.9 million. At yesterday's closing price, the stock would be worth $635.7 million. When US Airways hit its yearly high of $76, Tiger's stake was worth $1.25 billion.
CAPTION: FACING TURBULENCE
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