Originally Posted by
Aero1900
The point of a business is growth and profit. Indigo thinks the same way every business owner does. Get bigger, make more money! They made a 25% profit margin last quarter. Sure would be nice to make 25% profit on an airline double the size, don't you think?
I understand people are skeptical and have been burned before, but Indigo doesn't have some secret plan to not grow.
I agree with most everything you said and it represents the traditional business model and investor that we are used to.
But private equity firms and their methods are a whole different ball game. I did some internet research on some of the new big PE players and their methods. Their goal is often huge short term profits while turning around a failing business, and not necessarily the long term health of the business.
They excel in stripping much of the business's value (and pocketing it themselves) while maintaining or increasing the value of the business for a future IPO or sale.
Growth is a long term investment in a company. It requires that money made today be reinvested in the company to increase its future value. Any money invested in future growth is money the PE firm can not put in its pocket now.
Indigo's motive is to put as much money in it's pockets as it can while maintaining or increasing Frontier's value for a future IPO or sale. Their goal or concern is not necessarily the long term health of Frontier or your future at an airline they won't be part of 5 years from now.
I hope that I am wrong and you are correct!