How is that different than Frontier?

 

Slightly off the current direction of the thread, but meaningful to the original topic:

Does anyone else even suspect that there was some master plan right at the begining of this?

Frontier try to buy Spirit for $24/share. Jet blue fear the end result or a large low cost carrier on the east coast so they come along with a sweetheart deal at $33 of which an amount will be prepaid to shareholders. Oh and if its blocked they will pay $400m compensation (but the prepay amount shall satisfy the $400m). They then put together the lamest defense during the court case. They really dont want spirit, they just want to scupper the frontier/spirit deal. Oh, and Ted, who told the shareholders to accept the frontier offer and not the JB offer (probably got some A1 gig set up at frontier), said the wrong things to the judge to seal the deal for a block with JB.

Meanwhile, NK shares tank to 5-10% of the value during merger talks. Frontier then steps back up and will probably offer some really low ball offer like $3/share.

I know, some of these numbers are rounded and I may be a little off. I may be way off on my rounding and have glazed over all the facts. Just spitballing what it feels like as a small shareholder. It would make a good daytime movie.

 

Good grief, we had like 180 in ours.

 

Share price is not the issue. Its the massive debt that Frontier would have to take ownership of. Can Frontier afford to drop $1.2B this next september to make the balloon payment plus the ongoing 8% interest payments on the other $2B? That's $160M a year in added debt. Can Frontier magically add $160M in profits with Spirits assets? Because the turn-around on that now is substantial with the current business model not working.

 

Indigo could by Spirit and take it private while renegotiating its debt all while running it as a separate airline. After everything is settled with the debt they could then sell it to Frontier at manageable price. The goal is to acquire Spirit without someone else coming in and screwing it all up again.

 

Why would the bondholders even want to renegotiate? If Spirit doesn't pay them they can sell the assets and recoup their investment. The only reason to refinance would be at a higher interest rate and then Frontier or Indigo would get stuck with that even greater debt load. Its not like the bondholders will be wiped out. They are the most senior note holders and will get paid off before anyone else and will be paid in full. Its the subordinate debt holders that might want to renegotiate, but the amount isn't enough to make a difference financially.

 

Because a fully in tact, operational airline is worth more than whatever equity they could squeeze out of the assets at this point. Because they stand to lose in Chapter 11 depending on how that shakes out. Because maybe an equity swap with the thought of a sale or acquisition has a bigger financial upside. Lots of reasons.

 

Curious but what good are assets that are unable to generate revenue? Many of the assets that would have to be sold, are basically worthless until re engined. Sort of a unique scenario really. I have no idea how many aircraft are actually in this state. But it’s definitely more than 23.

 

The airplanes needing engine work are not owned, they are leased. I think what a lot of people are not taking into consideration is the fact that leased items cannot be included in part of the the calculations used to determine value in determining chapter 7 or 11. For example, the creditors can’t say “they are worth more in chapter 7 because we can sell all these airplanes and get our money back” they can only used owned assets. Which is why I imagine spirit has been leaving back so many airplanes. Those now cannot be used to determine spirits value in liquidation.

secondly - did everyone miss the fact that Hawaiian worked a deal to get all their junked engines traded out for good ones? Their downtime was very very minimal. My hunch is that those planes that Spirit has sitting do in fact have value and could quite possibly be back in the air quite quickly if they belonged to an owner that WANTED them in the air. I think spirit wants them sitting for now; which is why they aren’t pressing for a deal like Hawaiian did.

the 23 sold were perfectly good flying airplanes. They were an “older and less fuel efficient fleet”.

and, sorry I quoted you, this may or may not respond to what you’re saying. But yours was the easiest to click respond to and you were responding to the poster that I think I’m probably responding too as well. And it’s late and I’m tired haha!

 

Yep. Lots of Delta pilots match this description, unfortunately.