Originally Posted by
ShyGuy
Never thought I'd see the day when Virgin's stock price would be higher than Spirit. Different market cap though, but spread about 1.5 billion and closing. It's time to get the mergers rolling at the LCC-Major level. IMO it's the only way we can somewhat "guarantee" long term success. The players left are Alaska, Hawaiian, jetBlue, Spirit, Virgin, Frontier, Allegiant, and to a far lesser degree Sun Country. Some combinations should be allowed by the DOT to better compete with the 4 legacy carriers.
I think you're right on the merger front, but the only mergers that make sense to me right now would be JetBlue and Alaska. I don't see Allegiant being an attractive merger, even as profitable as it is, it doesn't really fit in with anyone. Virgin is attractive, but it would be at a premium, the quality of the product is probably better than JetBlue, but not enough to warrant a purchase. Hawaiian and Alaska make some sort of sense, but I think Hawaiian will do what it can to stay independent. It would take an awfully big payment to purchase Frontier right now, a huge premium over what they're worth, I just don't see anyone paying that premium. That leaves Spirit, which I'm starting to believe is becoming a little vulnerable. With the amount of firm orders and cash on hand, it's a little the same with Frontier, the premium on the shares will probably be too high to stomach.
Don't try to compare the listed price on an individual share of stock though, it's really like comparing Apple(s) to oranges.
Oh, and I know you meant to say DOJ instead of DOT, but you're right, while I don't think any further mergers involving the Big 4 will be allowed, unless something drastic happens, I don't see the same sort of opposition to a merger involving smaller airlines, including the legacies of Alaska and Hawaiian.
Originally Posted by
Tranquility
I'm not sure how much you follow our metrics or our management, so I'll keep it brief. Managements laser-like focus on costs is not for growing the airline, it's to keep our planes full which increases our profit (remember, over 40% of our revenue comes from non-ticket related items). The more full the plane, the higher our non-ticket revenue is (increases profit). Keeping costs down should be the goal of all airline managements, so I don't know why you're singling out NKS...
The markets we serve, and are growing into, stimulate their own demand. In each city pair we add service, passenger traffic grows nearly equally to the amount of service we add. We're not robbing passengers from AA or Delta (in fact, the opposite is what's happening). The difference is we can do it more profitably than they can (look at profit margins) now, and when oil returns to a higher level, they'll be doing it at a loss. People have the misconception that we steal everyone else's passengers, and the numbers point out that it's just patently false. Our passengers tend to think of flying for a vacation as purchase right up there with buying an appliance (they're big ticket purchases that they are using their discretionary income for). It's not that they will fly, they'll either not go, or if they do go, it'll likely be the cheapest option...
Hope this helped explain a few things. So much for brief!!
Spot on!