Originally Posted by MCDUmanipulator

Well if it doesn’t blow over quick the whole industry is in trouble regardless of what’s done. So could be a low risk bet.

Originally Posted by Meep

Fair point. Although, I’m sure the legacies will get a bailout though, NK on the other hand......

Originally Posted by sobo

I'm not an investing expert by any means, so take this with a grain of salt.


From Spirit's 2019 10-K:

Spirit has $1.55B in contractual obligations due for 2020. This does not include the cost of operations, just debt principal, interest, aircraft leases, and aircraft purchase obligations. So while the ~$1.1B in cash/short term investments on hand looks good, it's not enough to satisfy the debt obligations the company has for an entire year even if the airline did not have to consider things like fuel, labor, landing fees, taxes, etc.


To put that in comparison, from SWA's 2019 10-k.

SWA has $3.6B in contractual obligations. However, over $2b of that is aircraft orders (max) which they may not be obligated to pay for considering the aircraft is un-airworthy. Regardless, even if they did take the entire order they have ~$4.0B in cash/short term investments on hand.


More food for thought is how leveraged the aircraft are at each company. While for example Delta is indeed parking aircraft, it's because they have the luxury of having a paid off fleet and can downsize as necessary. I can't say for certain but I would imagine the most of the newer fleet at Spirit would be leased/mortgaged thus requiring payment whether or not an aircraft is generating revenue. Obviously not something great for business if demand falls to nearly 0.


Lastly, I think there is also an investor perception that the government would be more apt to help SWA or the big 3 versus something like Spirit/Frontier... but that's just a wild guess.


That is my best guess as to what I think Wall Street is seeing. In my personal opinion I think SAVE is tremendously undervalued overall though. I think the business model is robust and I also think the type of passengers will be quicker to bounce back versus the business travelers that the big 3 rely on to generate the most revenue. I also believe that even if we ban domestic travel for 30 days, the spool up will go back to normal a lot quicker than most downturns we've seen in the industry based on the fact that this is just a consumer fear issue that hopefully will be resolved if this gets under control.

Originally Posted by schmohawk

**Not a financial expert**

I don't think that is an accurate characterization of the debt obligations. $988 Million of that $1,552 Million of that are Flight equipment purchase obligations. How much of that is paid for in cash or current assets ? I'm guessing very little. E.G. I bought a $1,000,000 house but i financed the remaining $900,000 with secured financing and a $100,000 down payment. (I didn't, just an example) I believe a better look is at current assets vs current liability for short term viability.

But you're right, debt & purchase obligations and cash flow are a major problem for airlines with young growing fleets. How creative can management get with securing financing , and at what interest cost and schedule will determine the future of the airline. Godspeed

Originally Posted by sobo

I'm pretty sure the 2020 obligations are the actual amounts due for that particular year. For example, if you mortgage ~100 planes, you have ~100 planes worth of down-payments and payments due for that fiscal year.

I could be mistaken with how I'm interpreting the 10-k but it's a yearly breakdown which leads me to believe that they actually have $1.5b due in obligations this year.

Originally Posted by JulesWinfield

The market price is generally based on perception, not reality. Personally, I think it's a steal at $20, at $12, it is stealing. With that said, I am going to wait things out before buying more.

Originally Posted by flyboyike

I don't think any of this is based on any kind of reality. When a disease that in almost 6 months has killed 6,000 people WORLDWIDE is allowed to shut damn near the whole world down, something is clearly going on that's not based on anything tangible.

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Originally Posted by Balker

Analysts are getting nervous with NK’s lack of preventive measures. Christie doesn’t seemed too concerned about preserving cash, betting it’ll be over soon enough and this will be a great opportunity to increase market share and some other precious items like A320 slots and gates at a bargain. Problem is, every day it passes, he looks more and more like a rookie and ambitious CEO. If he could pull this off, he’d be a genius. Unfortunately, I agree (more or less) with wall st.
We need to park the unencumbered A319s ASAP. Keep them on active storage, that way is easy to bring them back whenever. Defer new airplanes, and start unloading debt. I can see 30-40% capacity reductions in the short term (2-4 months) and slowly back to normal (for NK) by 4th QTR (hopefully).