Originally Posted by
sailingfun
SWA's overall financial position compared to Delta is outstanding. They don't have any off the books debt or pension obligations. Whatever choices in fleets or growth they make could be sustained for a long long time.
Originally Posted by
gzsg
SWA non pilot costs are through the roof since they never went through Chapter 11.
IMO their nightmare has begun. Simply look at their on time performance, 10% behind us.
I believe they will have a long slow descent to bankruptcy that will take a decade.
That is true, and they have an ace in the hole.... bag fees. An instantaneous injection of huge amounts of cash to the bottom line. But, their growth potential vis-a-vis the big 3 is extremely limited. That is what is very interesting to me as an investor because you invest in business based on growth and risk (and growth potential). LUV has little risk overall because of that balance sheet, but their growth (potential) is anemic. the big 3 on the other hand, while having mountains of debt presently, are eating into that debt aggressively, and we all know how DAL will have it to $7B this year and $5B in 2016. And LUV's multiple is higher than DAL, so a basic examination of that would tell you that people are paying up to own LUV stock. Why I wonder? Is it the potential for the bag fees and that injection of cash flow? I have even thought about buying some deep in the money calls, but I just can't seem to pull the trigger on that (I did on AAL though.
) It is interesting to say the least..... and I do not think BK is anywhere on their horizon.