Originally Posted by
SmitteyB
I still believe JB can restructure the debt in Chapter 11, but I find myself more thinking about.... "then what"?
If JB went thru bankruptcy - which is a borderline guarantee if oil doesn't moderate down soon - then they would really just be restructuring the 2024 debt raise considering a lot of debt is tied to aircraft.
But "then what"? The airline comes out the other side with lower costs, probably fewer airplanes, maybe less debt - in exchange for equity - but the same structural issues: No where to grow. In an increasingly segmented industry of those who have scale and those who never will, it is hard to compete. I know people like to hate on this management team, but there are real issues of scale in our business. There are only so many people who make 100K+ in NY/New England/FLL who can get the credit card. At some point the growth in loyalty has to plateau. Then what?
I think the play is merge or die, but I'm becoming evermore pessimistic that there is a merger ahead for this company. I just don't see how even with a Chap 11 they can keep growing the enterprise in a fashion that also allows them to grow earnings.
Bingo. Ch11 is helpful, but let’s be clear… it is helpful because that makes us a more attractive merger target (hopefully) without as much debt and non-core assets.
The problem of “then what” has been apparent since we started the NK/JB merger failure. We have nowhere to grow long term. No scale. No dominant position in any key city (maybe FLL changes that equation? I’m neutral on that).
I do think a merger will happen for us, but the longer this drags on the more I wonder if it will be the type of merger we don’t really want. Something like an F9/B6 merger where we shuffle the deck chairs for a few years and are back in the same position.
We still have time, mid-2027 would likely be when we turn into a pumpkin for this administration to oversee the merger. We are along for the ride at this point.