Huh? Rich people typically stay rich and use downturns to become more rich

 

I'm just along for the ride. I'm at the top of the payscale plan on going down with the ship. I'll take action if and when I need to. Yes, I know it would take a long time to get a class at another airline, but TBH, I would welcome the break. I'm tired of this job (not the actual flying, but everything else that comes with it) and wouldn't mind a year off. Maybe I'll work at the Lego Store or a local coffee place and surround myself with products I love. Who knows.

But that my honest conversation.

 

Exactly. The rich get richer, the poor get poorer. Those with capital right now can afford to buy things and take losses as needed.

That is not us. We do not have capital. We cannot afford to take additional losses. We also cannot compete on price with the larger carriers.

I am a retired Wall Street analyst who's making a second career out of flying jets. I have resisted creating an account for a while despite tracking this forum for almost 20 years. I've tried to stay out of it and just watch sentiment but the reality is this guys:

Our recent bankruptcy served one purpose and one purpose only and that was to liquidate/transfer equity away from the shareholders.

Even if we had managed to increase our revenue by double digit percentages (which is not going to happen with a few more big seats or a few SWA passengers coming over due to bag fees) and decrease our cash burn by double digit percentages, both of which are unlikely, our business model would still be broken.

That was before DeepSeek knocked US tech stocks down earlier this year revealing how our stock market was really not doing well at all and the "Magnificant" Seven stocks were the only thing holding it up.

That was before the Tariff war kicked off.

We were in a coffin, then those two recent economic events really put the last nails in it.

It is my (formerly) professional opinion that unless we are acquired or find a cash-rich merger partner, we will be on the street by Christmas. None of our bond-holders are going to risk throwing more money at us in this climate - they will sell us or liquidate.

If you do not have apps out right now because you plan to ride the ship down and then see what happens, I respect that. If you are not putting apps out because you think our odds of surviving the year are decent, I encourage you to crunch the numbers and reconsider. Worst case if you apply you might get an interview, you might then get a CJO, and then a class date. From what I hear, that process can take 8-12 months right now depending on the carrier. That should give you some good time to see what happens here and hopefully prove me wrong.

 

ridiculous -
filler

 

Thanks for the great analysis. Very succint and accurate.

I have a question about the above part from your post.

If Spirit is losing $90M per month as the OP (Halon) suggests, do you believe that anyone would want to acquire NK in its entirety and have to foot that ongoing loss, or greater losses? Do you believe that there are "synergies" that are significant enough to override such a monthly loss? To put this in perspecetive, Frontier hasn't made over $90M in an entire year since 2019, which was 6 years ago.

What advantage would it give to any other airline to acquire NK in its entirety with what's going on in the economy?

Do you believe the new owners think NK is worth more as a whole or sum of its parts?

 

We are in uncharted territory here. The truth is nobody on this forum has any idea how this is going to shake out or who this is going to hit the hardest. My question would be how on earth are the legacies going to undercut NK on price if the CC and international revenue suddenly dry up? The entire reason NK has been unprofitable is because they have been unable to compete on price due to the fact that the legacies can offset their basic economy seats with CC/international/premium revenue. In a severe recession/depression that advantage goes away. Unless the mad king decides to subsidize the legacies they are going to be in a world of hurt as well. Do airlines with smaller footprints/lower cost structures prevail? Do the behemoths find a way to hunker down and slash costs to the point where they can weather the storm? Who tf knows… What I’m certain of is that I wouldn’t be overly confident that the legacies will maintain their previous advantage in this environment. The landscape has catastrophically shifted, and how this all shakes out is just a wild speculation at this point.

 

Nice information thanks ! I figured the airline wasn’t out of the woods yet.

So do you think it’s the business model that doesn’t work, or just an over saturated market place?

 

You sound just like me. I literally am in the same boat, thought process wise, pay wise, and fatigue wise. I’m here until they turn the lights out if/when that happens. I have been stuffing the couch cushions for a while. If Armageddon happens itll be a shock to the lifestyle but I’ll do something menial for a while then reevaluate where/what I wanna do. A life reset if you will. Praying it doesn’t happen .. but this market turmoil is gonna effect entire industry.. keep saving and ‘cross that bridge’ when we have too .

 

No one really knows how things will shake up and which players will prevail. I also can’t speak on everything, but what I can say is that VPs at UA plan on staying the course on the growth plan and take up market share as other carriers pull out. That’s the plan anyways.

Personally, I think that during these uncertain times, the ULCCs would gain price sensitive travelers. This kind of market is where ULCC thrive so it’s going to be interesting to see how it all plays out. I’d shocked if revenue doesn’t increase for y’all

 

I calculate operating synergy offset of a Frontier merger to be about 20-30 million against our cash burn, at best. Maybe 35 million in an absolutely ideal scenario.

Even if our monthly cash burn was only ~$50 million, that would be a ~$20 million deficit monthly, ~$120 million deficit in a year, which dwarfs Frontier's profit. Best case.

That being said, Frontier deal could still work with the same equity swap concept which would reduce our debt and therefore debt payments and reduce that deficit number considerably. That's why they have still made some offers. The numbers on this are super super tight though, and that's why their lowball merger offers have been rejected by our bond-holders so far.

The sentiment I'm tracking is that Frontier would rather not deal with a merger and just buy our jets at a discounted rate unless they can get a sizeable reward/discount from our bond-holders for taking the risk and headache of a merger. If our bondholders get spooked (if they are not already), they may make that move. Or they may just trigger liquidation before we burn through all of the cash they just gave us. The sooner they liquidate, the less money they lose, but then they have to sell off everything, which is not as attractive to them as it was even 12 months ago.

Broken for the oversaturated condition. Most business models aren't broken in a vacuum, but we are not in one. The carriers with stronger balance sheets will do what they can to promote a somewhat oversaturated situation during the downturn to take market share and eliminate competitors. We can't compete by trying to undercut them on price, which is why we are trying to shift away from being a ULCC. Will our business model shift work in time? I'm unsure.