Stifel teases up some airline M&A
 

https://seekingalpha.com/news/350727...ases-airline-m

Stifel teases up some airline M&A
Clark SchultzOct. 21, 2019 10:32 AM ET

Stifel turns positive on JetBlue (JBLU +4.5%) with an interesting M&A angle in the mix beyond the favorable view on JetBlue's valuation.

The firm sees some logic to Southwest Air (LUV +0.1%) buying either JetBlue or Alaska Air (ALK +2.6%).

The M&A wildcard is a large part of the reason that Stifel drops LUV to a Hold rating and elevates JBLU to a Buy rating.

What would be the point of JBLU?

Lucrative BOS & NYC market, a strong Carib / northern S. America route structure (where SWA has openly & repeatedly voiced their desire to expand to), large A220 order lined up, new long-range A321s on order, too.

If they’ve finally bought into the fleet diversification philosophy then this would make some sense.

^^^^^this^^^^^

Now then.....the question on my mind is could SWA actually afford to purchase JBA in the first place?

SWA had roughly $4B in cash and nearly double that in stock. They have enough to buy HA, NK and/or potentially B6 in a cash/stock acquisition.

Late to the party here, but SW has a very good track record for financial and operational management... almost certainly they could get financing as needed to acquire any of the US airlines which are smaller than they are. They way is not really in doubt, it's whether they have the will.

That is not the appropriate method for a valuation. Not saying that they couldn’t structure an appropriate buy out but there are many different mechanisms to fund such a deal, and determination of market value by share price alone is far from it. Cash on hand generally is used as minimally as possible.