A Bush administration plan to ease restrictions on foreign investment in US airlines could help a struggling industry, but analysts and consultants say there is plenty of money at home for the right deal, recently reported Reuters. (6/15/2006)

The airline industry is awash in capital, said Darryl Jenkins, an industry consultant. The report points to the last year's merger between US Airways Group Inc. and America West Airlines Inc. as evidence the industry does not require foreign capital to move forward, as some proponents of the administration's plan suggest.Much of the $870 million raised for that deal came from hedge funds, domestic airlines and other sources. Industry observers also agree US-based investors were ready to participate in the reorganisation of UAL Corp.'s United Airlines before the carrier financed its bankruptcy exit with debt.

In the same report, Robert Mann, an airline industry consultant in Port Washington, New York, also notes investors are shoving and elbowing?to get in line for any potential merger involving bankrupt carriers Northwest Airlines Corp. and Delta Air Lines Inc. whether they combine or strike separate deals.

A lot of people are lining up now because they believe consolidation is around the corner, believing that as carriers merge it will remove capacity from the industry and the companies will make money,?Jenkins reportedly said.

As per the information available, a World War II-era U.S. law limits overseas investment in airlines to 25 percent of voting stock, a condition that has discouraged international interest with a few exceptions. The Transportation Department and other proponents say change is overdue. Officials want to preserve the 25 percent equity ceiling but propose altering the control provision. They contend giving foreigners influence over pricing, scheduling, and other operating issues could expand the pool of investors, introduce new competition and enhance partnerships. The proposal could be finalised this summer.