Originally Posted by
BenS
Well, you're looking at the positive side of the question (from the buyer who would get assets without the bad debt that comes with it)..
The counter point would be there's a set of airlines that will realize they won't be the winning bidder for the assets.. if you want certain planes from Spirit, or maybe pilots, or gates, or slots in Newark, or whatever you have your eyes on.. if you realize your best bid will *not* win for the assets you want.. it creates incentives among those non-winners to try to outmaneuver the competition that will beat them at the bid..
Of course the catch there is, if you buy Spirit whole to get in front of bidders who would beat you at liquidation auction, you'd have to be big enough to handle the debt that comes with that play.
It seems that you suggest NK is more likely to be pieced out instead of bought as a whole. I can see that as well. My positive outlook for success is with hope that NK jobs would be saved without liquidation. For this to happen, NK needs to stop the severe bleeding. Some on this thread think DIP financing will just continue forever. Typically financing is tied to assets. NK is not a good financial risk at all. Bleeding needs to stop from wages and benefits as well as increased efficiencies within the airline operation. Revenues also need to increase but prices are very sensitive and the BK fear for consumers is real as well as the willingness for consumers to endure the NK product itself. This is a tough road where it is easier to cut wages and restructure route systems than predict consumer behavior. Both need to happen though.