Tailstand

I want to add a few more comments...

The late '80s until the introduction of the 737-400 in '92ish was when the entire industry was experiencing its last hoora with full service. The cost of this was so great that it overshadowed expenses related to the 'smoothness' or lack thereof from operating a multi-aircraft operation. Alaska's pricing power was strong along with large essential service subsidizes in said State that the company could afford to waste on service and be profitable. Every flight had a hot meal that ran about $10 per passenger. In addition, wine in coach was complimentary and each flight had 20 Chardonnay's and 20 Cabs to ensure flights never ran out. Stewardesses er Flight Attendants just poured from the bottle. Hard to imagine we made money at all. But we operated in high yield markets and barriers to entry in various Mexico destination until that was deregulated in '95 by NAFTA, but that's another topic.

WutFace

Since you brought it up, let's compare and contrast.

Southwest / Airtrain - $1.7 Billion

• Airplanes Acquired: 52 (737s)
• Orders Acquired: 60
• New Cities: 21
• Leases sold: 88

Alaska / Virgin - $2.5 Billon + $1.5 Billion Assumed Debt

• Airplanes Acquired: 0 (Returned)
• Orders Acquired: 0 (Cancelled)
• New Cities: 1
• Leases Sold: 0 (Expired)

If the company is planning on returning the Airbii, then it looks like the only thing Alaska got out of a 4 billion dollar deal was 14 gates between LAX and SFO and debt to fend off a hostile takeover. Any other airline could have done more.

Kelleher these guys ain't.

tzskipper

Truth (below)

In exchange for the $4b spent/assumed, ALK received $939m in shareholders equity (including over $600m in cash and equivalents), and and operation that was generating over $200m pre-tax annually as a stand alone entity (roughly 16% operating margin through q3 2016, the last reported quarter).

The "value" of controlling the leases on the acquired gates is probably subjective (market value?), so any value is in addition to the $939m above.

Not exactly 14 gates for 4b.

Just my opinion. I will apologize in advance if any of the above info is inaccurate.

S

Fgrosoli

Received the same email, but for now no call....

full of luv

But wasn’t the real value in kock blocking JB from the west coast expansion?

Reactivity

I wasn’t claiming that B&B are the second coming of Herb Kelleher. The statement made was, “Every other merged major runs a mixed narrow body fleet”, as if that was a good reason for any other airline to operate a mixed fleet, and was also demonstrably false. The knock on Alaska is that they will never be successful because they are “afraid to evolve”, implying that operating multiple types is somehow a route to success. Southwest is the successful counterexample. Not saying the Alaska is another Southwest in the making, just that operating multiple types, inherited from a merger or not, is not per se a hallmark of a successful airline.

rickair7777

Some people think the motive was fear of getting backed into corner, not enthusiasm for growth or evolution.

tzskipper

There definitely is a quantifiable value of the impact that a JB/VX hookup would potentially have had on yields. So aside from the basic facts of the balance sheet and income statement, there are these types of calculations also.

S

flynshoe748

Alaska buys airlines when their perceived territory is threatened. Delta wanted Jet America, United wanted QX for regional feed, and JB wanted VX. I think QX was forced out of Frontier regional flying because of the same perception and then didn't know what to do with the CRJs. Leased all of them to OO or something. That could be perceived as a weakness in the business decision making process. Was that Eastern or Pan Am's way out? Not suggesting the VX merger would produce those results, but it has happened before.

Any more hiring news?

Packrat

And that is exactly the model AS was going for with a single fleet. With VX they'll soldier on with the Airbus until the leases expire. As they do, they'll swap them for the 737s they ALREADY have on order. No sweat there.

As for the few VX owns outright, there are plenty of buyers out there who'll suck those off.

I don't understand how dumping the Airbus translates into losing the CA market.