look at the TA vote

 

Looking at the court documents, I’m seeing section 382 modeling, long horizon NOL usability modeling, tax shields etc. That is expensive work. This level of modeling is a waste of money, unless there is a buyer with a large taxable income. A buyer that expects to be around for decades and a buyer who cares about the preservation of tax assets. PE funds don’t. Small airlines don’t.
NOLs can be extremely valuable if used properly. NOLs are one of Spirit’s most valuable hidden assets. It appears that there is heavy NOL work in the court filings.
If there is a buyer, they would wait until after the bar date or deadline to file a claim against spirit to reduce unknown liabilities. Spirit is spending a lot of money to remove uncertainty and eliminate unknown liabilities.
Spirit is spending a lot of money to preserve value that spirit itself may never use.

 

United needs/wants a SE hub to push into LATAM and hit American. They do 7% market share at FLL and Spirit does 32%. Total almost 40%. JetBlue does 20% for which they already have started codesharing with and just today released the ability to book on each others website via miles etc.

Something to think about.

 

UA isn’t interested in getting big in FLL, sure they’d welcome more business there, but they are more interested in MIA. According to the VP of network planning last year, he apparently said it was better to buy our way into MIA, than grow in FLL. I’m paraphrasing of course, but that was the gist…

 

This is a big deal. It can't be overstated. There is basically only one reason 382/NOL modeling is done, and it's not liquidation or private equity acquisition.

 

Just so you know that NOL Carryforwards are not transferable directly in a sale/merger etc. So the "tax assets" if that's what you are referring to, would not be why someone buys Spirit. Any NOL benefit would either be completely wiped out in a sale or "revalued" at just a couple percent of their prior value.

 

United has a massive IAH hub that's growing to 500 flights a day. They do SA out of there. I can't imagine trying to also do that from FLL. United also doesn't have the planes right now to do that kind of flying.

 

As far as airline management pov: Delta + LATAM JV + AM JV + ownership stakes (airline ecosystem) are much larger than UA & AA (no revenue sharing) combined in Latin/South America.

American is second followed by United. United is missing a hub in the most populous portion of the U.S. B6 is a competitor. For every UA pax that choose B6 over UA that is money lost by United: not a solution. There are no cities with enough O&D that aren’t overshadowed by ATL , MIA, and CLT in the SE. they would love a SE hub, especially since IAH is 20M pax behind CLT and 15M behind MIA annually.

IAH cannot be a DFW, ATL, CLT, or MIA. Despite its O&D its geography is awful for connections, is bled by nearby HOU, and lives in the shadow of DFW. American’s west coast gap could be solved by PDX or JV/merger ties with AS and Delta’s TX gap by AUS or some sort of JV/merger with WN.

 

I remember being in DEN when Kirby came through. He was asked about FLL and the NK gates/FLL hub possibility. He mentioned that FLL doesn’t have the infrastructure to be a hub. Only 2 runways and the NK gates (which is next to B6) is limited. NK owns something like 12 gates and hubs require a lot more than 12 gates. UA also
parks on the north side. It would be very inconvenient for a UA pax to run over to the south side and clear security again just to fly out of there.

Anything can happen, but I doubt FLL ever becomes a hub to compete with MIA. It’s just not there and probably will never be.

 

Exactly. FLL has almost zero value to United as an SE hub and certainly not enough value to acquire Spirit.