“It’s time to sell ladies and gentleman,” was the blunt message to the IATA annual meeting of David Bonderman, the founding partner of Texas Pacific Group, the airline investment vehicle that has helped revive or launch carriers like Continental Airlines, America West, Ryanair and Tiger Airways. “This is as good as it gets in the airline industry and it’s only going to get worse,” he added.
And Bonderman is true to his word. Texas Pacific is being very selective about its airline investments at present, he said, with its stake in Singapore’s Tiger its only recent venture, while it is backing another low-cost start-up in an as-yet undisclosed location, he said. “We’re investing in markets where there is room,” he said. Texas Pacific has also sold most of its stock in Ryanair, and only holds a low single-digit stake today.
Describing investment decisions as “a cyclical call”, Bonderman believes the industry is probably at its peak. “It has been the same phenomena every 6-8 years since the Wright Brothers,” he said.
Pointing to the massive aircraft orders that Airbus and Boeing booked last year, this is “almost the perfect predictor of the top of the cycle. In two years time you are going to see everyone cancelling those airplanes.”