Upgrade times in the future?
12-31-2018, 11:21 AM
#131
Gets Weekends Off
Joined APC: Apr 2013
Posts: 3,721
Stock valuation:
(NYSE: AAI), the former parent company of AirTran Airways (AirTran). Based on the average of Southwest Airlines' closing prices for the 20 trading days ending three trading days prior to May 2, 2011, of $11.90, the transaction valued AirTran common stock at approximately $7.57 per share. (press release; SWA investor relations)
Today's closing price, last day of 2018, for Alaska Air Group (ALK: NYSE): $60.33
That is quite a premium. Now, if ALK was trading at a few times earnings and on Jim Cramer's "Wall of Shame" as AAI was in 2010....or Hawaiian, etc....I agree.
All of these stocks have valuations too high....and Spirit is up 20% this year.
IF in the middle of a recession and these stocks trade for single digit multiples...maybe we make a bid...then there is DOJ anti trust variables....a risk for a carrier with a large domestic presence...unknown what they will do (even in a Republican Administration) ((DOJ tried to block Time Warner/AT&T under Trump))...SWA doesn't like paying break up fees....AAI concentrated in Atlanta....we didn't serve ATL at all, so little anti-trust overlap, depsite build up in MKE and BWI...
(NYSE: AAI), the former parent company of AirTran Airways (AirTran). Based on the average of Southwest Airlines' closing prices for the 20 trading days ending three trading days prior to May 2, 2011, of $11.90, the transaction valued AirTran common stock at approximately $7.57 per share. (press release; SWA investor relations)
Today's closing price, last day of 2018, for Alaska Air Group (ALK: NYSE): $60.33
That is quite a premium. Now, if ALK was trading at a few times earnings and on Jim Cramer's "Wall of Shame" as AAI was in 2010....or Hawaiian, etc....I agree.
All of these stocks have valuations too high....and Spirit is up 20% this year.
IF in the middle of a recession and these stocks trade for single digit multiples...maybe we make a bid...then there is DOJ anti trust variables....a risk for a carrier with a large domestic presence...unknown what they will do (even in a Republican Administration) ((DOJ tried to block Time Warner/AT&T under Trump))...SWA doesn't like paying break up fees....AAI concentrated in Atlanta....we didn't serve ATL at all, so little anti-trust overlap, depsite build up in MKE and BWI...
Spot on analysis.
Gary is no friend of labor, but he knows how to run an airline and the finances that go with it. He also is a master of talking out of both sides of his mouth during investor meetings.
Wait until the next round of recession leading to near bankruptcies and consolidation. Once some airlines with huge debt are on the ropes, that is when Southwest will go shopping again. I personally think Alaska is too expensive. Their purchase of VA was a huge poison pill that SWA may not be willing to swallow.
12-31-2018, 12:21 PM
#132
Gets Weekends Off
Joined APC: Sep 2015
Posts: 282
I don’t disagree with anything you guys have said. I also agree that the purchase, (if there is another one) would be timed for the next recession. I was more or less just speculating on who the next target might be, not the specific timing of such a transaction. Here’s to lots of organic growth for as long as it lasts.
12-31-2018, 05:14 PM
#134
Gets Weekends Off
Joined APC: Nov 2015
Posts: 1,156
I figured GK was dead serious when he said SWA would be 737 only as long as he was CEO. I don't remember when/where he said it but it was a clear and forceful statement at the time.
01-02-2019, 03:16 PM
#135
Banned
Joined APC: Jun 2017
Posts: 272
I heard the new revenue guy (Waterso) say he wants big metal but higher ups don’t want it. He then went on to say...they would t be here forever. That was about 3-4 years ago. Same time he forecasted a 12,000 pilot group in about a 5 year period. That part seems to be coming true. I don’t think Tom Nelon (so) wasn’t brought on for anything but growth when Kelly calls it quits after Hawaii launch.
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01-02-2019, 06:25 PM
#136
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Joined APC: Jun 2010
Position: DOWNGRADE COMPLETE: Thanks Gary. Thanks SWAPA.
Posts: 6,831
I heard the new revenue guy (Waterso) say he wants big metal but higher ups don’t want it. He then went on to say...they would t be here forever. That was about 3-4 years ago. Same time he forecasted a 12,000 pilot group in about a 5 year period. That part seems to be coming true. I don’t think Tom Nelon (so) wasn’t brought on for anything but growth when Kelly calls it quits after Hawaii launch.
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01-02-2019, 08:23 PM
#138
Gets Weekends Off
Joined APC: Jun 2010
Position: DOWNGRADE COMPLETE: Thanks Gary. Thanks SWAPA.
Posts: 6,831
01-03-2019, 02:14 PM
#139
Gets Weekends Off
Joined APC: Nov 2015
Posts: 1,156
We won't get it unless it has a full complement of those heavy long-throw switches populating the overhead panel switch forest. And we probably won't buy the AOA indicator until someone else crashes one.
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