Barons of Buyout

In the midst of a giant shopping spree, Fort Worth’s Texas Pacific Group sets its sights on Internet airline ticketing.

In the battle for leisure travelers’ dollars on the Internet, the Purple Demon is swooping in to give Star Trek’s Captain Kirk a run for his money. Project Purple Demon is the code name for Hotwire.com, a popular travel Web site that was officially launched in late October to offer discount airline tickets. It’s a frisky new competitor of Priceline.com’s, the Internet bidding service whose ads feature actor William Shatner. Like Priceline, Hotwire sells excess capacity—unsold seats—on flights. But unlike Priceline, where consumers make bids for discount fares and then wait to see whether their offer is rejected or accepted, there is no bidding on Hotwire. The customer plugs in dates and destinations, and within a minute the site comes up with a price. Hotwire’s founders—including six major airlines as partners—are betting that the site’s ease of use and bargains (recently a round-trip ticket from Dallas-Fort Worth International Airport to Chicago O’Hare, with a day’s notice, went for $236, a fraction of the retail price) will give it an edge over competitors. And they’ve got a lot riding on its success— $75 million, to be exact.

The company behind all this is a Fort Worth investment firm called Texas Pacific Group ( TPG), run by a media-shy financier and founding partner named David Bonderman. Bonderman helped lead the buyout and turnaround of once-bankrupt Continental Airlines, and TPG is known for accomplishing the same thing with America West Airlines. Basically it buys troubled companies with the hope of selling them later for a profit (when debt is used to help finance such deals, they’re called leveraged buyouts, or LBOs). TPG cut its teeth doing LBOs of Old Economy companies, and its

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