Meaning what exactly?

 

Go back some pages on the thread

 

If I go back some pages I can find merger rumors with every airline on US soil.

If by "sun setting" you are inferring Sun Country, then no. Those rumors haven't gone outside the "brain trust" of APC.

 

You paint a different AS then what is represented on paper. AS, the board, and its management absolutely have no intention of seeing the brand go away. AS isn't flailing in any facet from a business standpoint. The metal is moving, the market cap is insane, shareholders are getting paid. Front a company standpoint, AS is super solvent and extremely strong.

Now from a pilot standpoint? Let me count the ways lol...

 

If some entity were to buy Alaska Airlines, it would be expensive. Our current market cap (the value of all shares outstanding, the price to buy the company) is $7.5 billion. That's at our current share price of $58. Any buyout would need to pay a premium on shares. Currently, the consensus price target for Alaska stock is in the $80 to $90 range. Any buyer would have to pay at least that much if not more per share to buy Alaska. The price of such a deal would be north of $10 billion and possibly as high as $12 billion. Of course there are other ways to structure a deal besides a straight cash buyout, but either way, it's going to be pricey.

When talking about those big numbers it's important though to consider the context. For instance, American Airlines current total debt is around $30 to $40 billion. That puts the cost of buying Alaska at 1/4 to 1/3 as much as American airlines is in the hole. Or, consider the VX buyout for $4 billion. Currently, Alaska is worth as much as three 2016 VXs. When you look at it that way, maybe Alaska isn't all that expensive?

​​​​​​There are several reaons why someone would pay so much for Alaska. First of all, Alaska has gates at premier airports. You can't get more gates in Seattle, SFO, LAX, San, etc without buying another airline. Another reason someone might want Alaska is Alaska's great deal on the MAX. As far as I know, all the other US carriers paid full price for the MAX because they signed their deals before the MAX was grounded. Alaska got the deal of the century on narrow body airplanes. And a third reason why Alaska could be a target for a buyout is Alaska's low operating costs. Alaska has the lowest cost per seat mile of any airline outside of the ULCCs. An ability to compete on price is a huge annoyance to Alaska's competitors.

Alaska's biggest strength, as well as its biggest weakness, has always been population and wealth growth in the Pacific Northwest. One thing I've noticed after flying into SEA and PDX 10,000 times is their geography, those cities might as well be islands. They have ocean on one side and mountains and a vast deserts on the other. Airtravel is essential to Pacific Northwestemt cities and just by the quirk of history (deregulation) a small charter airline (Alaska) became the biggest player in town. The PNW has transformed from a depressed logging camp into an information age powerhouse. With a constant 5% annual population increase and an explosion of tech money, Alaska could safely grow organicly while keeping its costs low. The downside to living off this low hanging fruit is that Alaska became risk averse and isolated from industry trends. Now, Alaska struggles fo become a dominant player in California because its value product doesn't match the demographic and they don't have the marketing prowess or confidence to change anyone's mind. Can Alaska continue on as a specialized little island airline? Possibly, but it's also possible that the shareholders might prefer a one time cash jackpot to single-digit long-term growth from a company that operates in a historically volatile market. If it were up to me, I'd prefer to cash out my Alaska shares at a 25% premium and put that money into Amazon.

 

All good, except Godzilla has entered Tokyo (Delta). Lets see how that changes the math in a few more years.

 

Great points. Southwest had a $1M rebate attached to its Max contract should simulator training be required. I'd love to ser
the deal for both.

 

Delta has a better product than Alaska, a worldwide network, great management, and motivated employees. On a level playing field Delta would crush Alaska. The limiting factor, and Alaska's shield, is the lack of gates at Seattle. The same real-estate constraints are also what protect Alaska from ULCCs in Seattle. There's such a huge travel demand in Seattle that whoever owns those gates will make a profit. Alaska was lucky in that it arrived first and there's now not enough room for anyone else. With One World, and the American code share, Alaska can remain the poor man's Delta alternative as long as the city doesn't build another terminal.

Outside of Delta in Seattle, there's also a future risk to Alaska Airline's other revenue honeypot: the state of Alaska. As America moves away from an oil economy over the next couple of decades, demand for flying inside Alaska will dry up as well as the subsidies that support many of the smaller communities that Alaska Airlines serves up there. Unless someone figures out how to turn Alaska into the next Iceland and drive some millennial tourism up that way, I don't see much new revenue potential up there past 2030.

 

“Delta has a better product than Alaska, a worldwide network, great management, and motivated employees.”

Lol. The only thing you got right is Delta has a worldwide network. Please.

 

Delta absolutely has a better product than AS.