Alaska nearing deal to acquire Virgin America
04-06-2016, 12:23 AM
#102
Gets Weekends Off
Joined APC: Jul 2013
Position: Wicked Artsy, Moderately Fartsy
Posts: 194
United paid $3B for Continental that had 348 airplanes (all stock transaction)
Delta paid $2.6B for Northwest that had 320 airplanes (all stock transcation)
Alaska pays $4B for Virgin America that owns 6 planes and leases about 60? Plus is has to give up $2.6B of its cash, which neither Delta nor United had to do since they did a stock only purchase.
What am I missing? Wouldn't it be cheaper to just buy planes and grow organically into California? An all Boeing airline buys an all Airbus airline?
This whole thing looks nuts.
I wish you all luck.
Delta paid $2.6B for Northwest that had 320 airplanes (all stock transcation)
Alaska pays $4B for Virgin America that owns 6 planes and leases about 60? Plus is has to give up $2.6B of its cash, which neither Delta nor United had to do since they did a stock only purchase.
What am I missing? Wouldn't it be cheaper to just buy planes and grow organically into California? An all Boeing airline buys an all Airbus airline?
This whole thing looks nuts.
I wish you all luck.
04-06-2016, 06:33 AM
#106
Gets Weekends Off
Joined APC: Jan 2013
Position: Pitot heat, what's to eat?
Posts: 392
United paid $3B for Continental that had 348 airplanes (all stock transaction)
Delta paid $2.6B for Northwest that had 320 airplanes (all stock transcation)
Alaska pays $4B for Virgin America that owns 6 planes and leases about 60? Plus is has to give up $2.6B of its cash, which neither Delta nor United had to do since they did a stock only purchase.
What am I missing? Wouldn't it be cheaper to just buy planes and grow organically into California? An all Boeing airline buys an all Airbus airline?
This whole thing looks nuts.
I wish you all luck.
Delta paid $2.6B for Northwest that had 320 airplanes (all stock transcation)
Alaska pays $4B for Virgin America that owns 6 planes and leases about 60? Plus is has to give up $2.6B of its cash, which neither Delta nor United had to do since they did a stock only purchase.
What am I missing? Wouldn't it be cheaper to just buy planes and grow organically into California? An all Boeing airline buys an all Airbus airline?
This whole thing looks nuts.
I wish you all luck.
ANALYSIS: Alaska Airlines Buys Virgin America
The risk for Alaska is more of the intangible strategic variety. The $2.6 billion price tag is reflective of a lot of things, very few of which have anything to do with the underlying value of Virgin America itself..........
The immediate scale in Los Angeles and San Francisco help turn Alaska into a power in the western United States while further diversifying the network away from the Pacific Northwest. Alaska now has a hub or focus city in Seattle, Portland, San Francisco, Los Angeles, and San Diego (you can also throw in Anchorage if you’d like) which is absolutely blanketing the West Coast of the US. In fact no other airline can match the breadth of Alaska’s coverage (Southwest comes closest but is weak in the Pacific Northwest) in the region.
The immediate scale in Los Angeles and San Francisco help turn Alaska into a power in the western United States while further diversifying the network away from the Pacific Northwest. Alaska now has a hub or focus city in Seattle, Portland, San Francisco, Los Angeles, and San Diego (you can also throw in Anchorage if you’d like) which is absolutely blanketing the West Coast of the US. In fact no other airline can match the breadth of Alaska’s coverage (Southwest comes closest but is weak in the Pacific Northwest) in the region.
04-06-2016, 07:37 AM
#107
UCH Pilot
Joined APC: Oct 2014
Position: 787
Posts: 776
Alaska's market value is $9.9B. That includes Horizon. So they basically are paying over 40% of their existing value to acquire VA? I don't think SFO and LAX "gate space" is worth $4B. Especially when you have to consider that you've just added a different fleet type to your airline. Plus if they decide to scrap the Airbus and buy new Boeing's they have to pay for those as well.
I've always admired Alaska's conservative pro-airline management. My faith in them is starting to crack.
04-06-2016, 08:20 AM
#108
Gets Weekends Off
Joined APC: Mar 2006
Position: guppy CA
Posts: 5,171
United paid $3B for Continental that had 348 airplanes (all stock transaction)
Delta paid $2.6B for Northwest that had 320 airplanes (all stock transcation)
Alaska pays $4B for Virgin America that owns 6 planes and leases about 60? Plus is has to give up $2.6B of its cash, which neither Delta nor United had to do since they did a stock only purchase.
What am I missing? Wouldn't it be cheaper to just buy planes and grow organically into California? An all Boeing airline buys an all Airbus airline?
This whole thing looks nuts.
I wish you all luck.
Delta paid $2.6B for Northwest that had 320 airplanes (all stock transcation)
Alaska pays $4B for Virgin America that owns 6 planes and leases about 60? Plus is has to give up $2.6B of its cash, which neither Delta nor United had to do since they did a stock only purchase.
What am I missing? Wouldn't it be cheaper to just buy planes and grow organically into California? An all Boeing airline buys an all Airbus airline?
This whole thing looks nuts.
I wish you all luck.
I'm expecting a few more mergers in the airline industry over the next few years.
As an airline employee, I applaud industry consolidation because higher airline ticket prices means higher pay for those of us who work in the industry. Just like our post-911 pay cuts translated into lower ticket prices for the public. I want to get some of that money back from the public.
04-06-2016, 08:25 AM
#110
Gets Weekends Off
Joined APC: Apr 2012
Position: 737 CA
Posts: 508
So pointing out that Northwest and Continental were purchased for far less than Virgin America, a LCC, is me trying to be a "CEO"? I think its a fairly basic financial comparison. Why wait until now? Only because JB wanted to buy them? Why not buy them last year, or 3 years ago when they would have been cheaper. The upside reasons (growth in west coast) would have still existed, plus VA would have had far less debt back then.
Alaska's market value is $9.9B. That includes Horizon. So they basically are paying over 40% of their existing value to acquire VA? I don't think SFO and LAX "gate space" is worth $4B. Especially when you have to consider that you've just added a different fleet type to your airline. Plus if they decide to scrap the Airbus and buy new Boeing's they have to pay for those as well.
I've always admired Alaska's conservative pro-airline management. My faith in them is starting to crack.
Alaska's market value is $9.9B. That includes Horizon. So they basically are paying over 40% of their existing value to acquire VA? I don't think SFO and LAX "gate space" is worth $4B. Especially when you have to consider that you've just added a different fleet type to your airline. Plus if they decide to scrap the Airbus and buy new Boeing's they have to pay for those as well.
I've always admired Alaska's conservative pro-airline management. My faith in them is starting to crack.
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