so how many no showed for the class that started this week?

 

None, we're all here.

 

Much of the value of the Frontier Airlines that the private equity group Indigo purchased was the Airbus aircraft orders that were on the books. These aircraft were negotiated and secured at an incredibly low rate.

****///Disclaimer - speculating here\\\****

With each aircraft that Indigo receives (and subsequently returns one currently on property with much less favorable terms), Indigo realizes a significant cost savings ($7 to $10 million?). If Indigo is able to pocket this savings themselves (versus allowing Frontier to benefit from the lower rate), Indigo can line their own pockets with each new aircraft that is received. It would depend on how the leases, both old and new, were structured. Because Indigo is privately held, this information is not public.

A one for one aircraft swap could represent a huge financial gain immediately to Indigo, while an addition of a new airframe (not a replacement) would represent more of a long term investment in Frontier and it's future value.

Could Indigo simply be lining their own pockets with each new aircraft that arrives on property (while perpetuating the illusion of growth)??

 

You obviously didn't go to business school. The larger the airline, the larger the potential profit. They are letting older aircraft with high lease prices go, and taking new aircraft with better lease prices. This has been the plan all along. Every one of our 319s is going away and being replaced by a new 320 or 321. That's growth by the way. When you replace a 150 seat plane with a 186 or 230 seat plane, the airline grows. Maybe not the number of planes in the fleet in a 1 for 1 swap, but the upgauge of AC is growth. As mentioned above, they have a financial incentive to take delivery of all the new planes on order and I believe they will. Almost all of our 321s are on property now. Our NEOS have begun arriving. The old planes with crap leases are being returned, as planned. They have hired over 400 new pilots since taking over, and we've got 80 more airplanes on order.

The point of a business is growth and profit. Indigo thinks the same way every business owner does. Get bigger, make more money! They made a 25% profit margin last quarter. Sure would be nice to make 25% profit on an airline double the size, don't you think?

I understand people are skeptical and have been burned before, but Indigo doesn't have some secret plan to not grow.

Welcome aboard, new hires!

 

I had a dream last night:

United has given Frontier an engagement ring.

 

Frontier can't even afford to pay for the wedding.

 

I agree with most everything you said and it represents the traditional business model and investor that we are used to.

But private equity firms and their methods are a whole different ball game. I did some internet research on some of the new big PE players and their methods. Their goal is often huge short term profits while turning around a failing business, and not necessarily the long term health of the business.

They excel in stripping much of the business's value (and pocketing it themselves) while maintaining or increasing the value of the business for a future IPO or sale.

Growth is a long term investment in a company. It requires that money made today be reinvested in the company to increase its future value. Any money invested in future growth is money the PE firm can not put in its pocket now.

Indigo's motive is to put as much money in it's pockets as it can while maintaining or increasing Frontier's value for a future IPO or sale. Their goal or concern is not necessarily the long term health of Frontier or your future at an airline they won't be part of 5 years from now.

I hope that I am wrong and you are correct!

 

How many in the class Saluk?

 

Yes, we can. It will be held at the Little Chapel of Love in Las Vegas. First ten RSVPs will qualify for $19 fares on the redeye to Vegas.

 

I heard 28 Jan 3rd class?