Originally Posted by
e6bpilot
You could take it one of two ways.
1. EIM is knocking at the door and wants to fire them all. They are in self preservation mode and looking under the couch cushions via leaseback schemes and other free cash flow generating revenue models to bribe institutional investors to keep their jobs.
2. EIM is knocking at the door and wants to install a board of directors that is going to hollow out Southwest and turn it into a short term cash printer and then dump it. Current leadership are freeing up cash to pay investors and generate earnings to defend the airline and its people from this outside invader.
I am firmly in the option 1 camp after todays announcements. Maybe I am getting jaded after a decade of mostly empty promises from Dallas, but this sure feels like they are in short term panic mode to preserve their jobs so that they can keep on slogging along with their stale and inept leadership that they have demonstrated for the last decade or so. While I am no fan of EM or their founder, I hope they succeed in flushing the C suite and giving this place a fresh start.
3. Getting rid of the cash lowers the assets of the company. Makes an outside leveraged buyout less attractive because the banks won’t give you capital as a corporate raider when there’s no (or less) assets to take from the raided company. Also makes the share price higher so the raider has to borrow more to pay for the same shares.
Im just an outsider looking in, but it doesn’t look like the primary plan of your CEO was a golden parachute. He could have already made a deal with the devil and sank the share price for a “retirement bonus” with a whole lot less hassle. Doesn’t look like that’s the game plan.