Originally Posted by
FriendlyPilot
Mergers are not a free ride. Acquiring Spirit also means taking their debt.
Alaska had no net debt in 2015 before acquiring VX. In fact they had $600M more cash than debt. After the VX acquisition because of the VX debt and the financing used to buy VX, Alaska had a $2.5B negative net debt. A $3B swing to the negative (the effective cost of the merger). Today Alaska still has a $2.4B negative net debt, even though the merger was almost a decade ago. Alaska is arguably in a worse position today than it was in 2015. That was the cost of "preventing Jetblue from buying VX" which in hindsight would have probably just done the same to Jetblue. Jetblue has now dodged two acquisitions that probably would have made it worse off than it is now.
point taken, but Alaska and virgin were not fighting for the same tiny market share, of which there is little to expand on as both F9 and NK are finding out. Even the ex CEO of American is confident that these airlines are stronger together than apart even when questioned with “can F9 even make the acquisition”.
and just from a non-biased stance on your argument, this is chatGPTs response:
“Sure, they carry more debt now. But:
- It’s manageable and has been refinanced at favorable rates.
- They consistently post solid profits and maintain investment-grade credit ratings.
- Their balance sheet is far healthier than many peers — including JetBlue or Spirit.
Final Take:
Yes, Alaska took on debt to buy Virgin — but the deal strategically transformed the airline and helped it compete in ways it never could have otherwise. So while the forum post is financially accurate, the overall view that Alaska is “worse off” is short-sighted. Long-term, Alaska is clearly stronger for having made the acquisition.”