Thursday, February 5, 2015

Only in America: The $5M Coin Toss

The following is excerpted from a Social Media page belonging to my former boss, Mr. Gordon Bethune.  I reprise it here with the kind permission of the author.

"So that day was the result of CO repurchasing the controlling Continental "A" shares (they had 10 to 1 voting rights) from Air Partners, later TPG, who had recently sold them to NWA. TPG had earlier threatened to sell them to Delta along with the whole company, but we out maneuvered that. After the sale to NWA , I demanded NWA sell the shares back to CO so as to be 100% independent. I got the majority of the Board of Directors to support me.

No deal.

We were being sued in Federal Court by the Justice Department to un wind the sale as anti competitive....of course, that's what we wanted so we demanded NWA have only a code share but no ownership of our shares. After a long day's haggle in a Georgetown, Washington DC apartment, we were down to just the total cost....they were locked at $435 million and we were not going to pay over about $430 million. We were due back in Federal Court in DTW that next day. At about 4 pm, I asked the NWA CEO to step outside with me...I said, let's flip a quarter for it. Although completely flabbergasted, he called was tails and we bought our independence for 430 million dollars.
Subsequent events, like 9/11 would have sunk our company had we been controlled by NWA. As independents, we were able to sell stock and raise debt as we were outperforming the market. NWA, UAL, DAL, American West and USAir all tanked....eventually so did AA. We didn't. Those days were way behind us.
Flying home that night from DCA I asked our then CFO, Larry Kellner, later a great CEO for CAL,how much could we give every CO employee of the newly won NWA money to celebrate our independence....he said $100.
What a fun day for us and a recognition of true independence for us all.
I loved being 100% independent and I loved sharing the $100 with everyone.....what a fun day...I didn't realize at the time how important the independence from a NWA would be in the financial markets after 9/11.

...I'll never forget flipping that quarter to give us a chance.,"