ALPO Whisperer

I'll add my $0.02 to this discussion...

Shortly before Spirit's IPO, its my understanding that NK's owners/management met with ALGT. Spirit was cash flow negative for three straight quarters going into the IPO, yet was "posting profits." The extent of those talks I do NOT know...

With that said, NK's owners decided to go forward with an IPO. Spirit has embarked upon an aggresive growth strategy since the IPO. It's more about getting to a level where the airline can self-sustain its own growth (ie, critical mass) rather than depending upon outsiders to constantly put money into the operation. Along the way, NK's owners have done a lot in the way of adding value to the enterprise, especially with the recent order for 75 A320 series jets.

Since the IPO, Spirit has seen a marked shift in strategy from Latin American expansion to more domestic and secondary markets. It started with LBE, CRW, IAG, PBG and has now progressed to more western US markets. Spirit's now serving an ALGT stronghold (AZA). C'mon...really?

NK's focus is now shifting towards high fare business centers connecting with vacation and VFR (visiting friends & relatives) destinations. ALGT's focus remains connecting secondary markets with vacation destinations. If you combined the two networks, one could argue it would result in a very strong network that would open up endless growth opportunites with all the new markets combined. There's a lot of risk involved though...and that's for another discussion at a later time.

Now, if Spirit can't grow to that critical mass threshold, then one has to ask the following question: What's the future gonna look like if the operation can't produce enough revenues to finance its growth?

IMHO, a merger between Spirit and Allegiant would make sense. Both have similar business models and lead the industry in ancillary revenue initiatives. It shouldn't come as a suprise to anyone if it were to happen.