Originally Posted by
FLYBOYMATTHEW
I think it's optimistic to think a contract is coming any time soon. I believe Spirit buys Frontier in 1-2 years. Franke wanted it when he was on the board at Spirit. Biffle has morphed F9's business model into a spitting image of NK's. Fornaro was brought to NK clean up the image and improve performance metrics, but also because he has the M&A experience. Baldanza wanted to grow NK organically, so he was given the boot. Once F9 is IPOed and SAVE stock reaches a predetermined value as to not dilute the share price too badly, Spirit will make a bid using mostly stock and save their cash reserves to fund continued growth. There is very little route structure overlap, but that's starting to change as both airlines grow and begin to infringe on the each other's territory. Common fleet, common reservation system, common business strategy...it's basically plug and play. Change some signs, paint some airplanes, buy some uniforms...voila!
The worst part about this scenario is how it affects contract negotiations for both groups. Right now, both management groups are enjoying a "yuuuuge" comparative advantage in labor savings over the competition. Do you think they want to give that up any time soon? Merge the airlines, and we're back to square one on negotiations plus mired in an SLI for a couple more years.
I think you're pretty much spot on. This allows Spirit to buy F9, Fornaro to use his M&A skills to get the deal done and puts Franke back at the top of the board of directors with Biffle as president. One more buy by Indigo - a NAI type operation to join all the "little" ULCCs together globally and you've got Franke's global domination dream come true.
As you alluded to, another log in the road is that the buyout of F9 by Spirit other allows for both management groups to stall their talks when they get close to a deal (self help). Just because of sheer complexity they could kick this down the road for who knows how long and blame it on the JCBA the pilots want before the merger progressed.
None of us are going to get anything until the NMB releases us and management may be able to stall beyond that date by announcing the merger. And no - I didn't just give management this idea. These guys aren't playing at the Potter/Tate level.