Southwest Line on Credit?

[SWA Bubba]

+1

The legacy carriers build their networks around international routes, and half-a** the domestic stuff. WN starts with an incredibly strong domestic network that the legacies can never compare to. If WN can get their house in order in terms of IT department then they could be a serious powerhouse globally.

Someday.

Shhhhh.... Don't tell the General, though. Just tell him that Southwest is thinking about starting an international network out of LBB.

Bubba

 

[OurMoney1]

Saw this on another board and thought is relevant to both the SWA & JBLU folks...enjoy


Where is there more discretionary spending, Seattle or New York?
Which has better ROIC, Hawaii or NY?
Which aviation market is the most lucrative market on this planet?
How much exposure do we have in said "most lucrative market on this planet"?
As much as this sucks ...
Jetblue has (all max #s):
173 non-stop takeoffs out of JFK with very nicely build 26 gates!
37 non-stop takeoff out of LGA (no comment on the gates )
141 non-stop takeoffs out of BOS
18 non-stop takeoffs out of DCA
Gary wants 15% ROIC? He ain't gettin' it outta Lubbock or Wichita, he'll get it out of NY market!
Now, here is the scary part:
Current total net assets (after liabilities): $1.88 billion
Market cap (if you were to buy all outstanding shares this am): $1.9 billion
(One could buy the entire airline for a $120 million dollar premium! Remember years ago when hostile takeovers / leveraged buyouts was the big threat? I would definitely be worried if I was a JBLU pilot).
Now if you look at the last LGA / DCA slot auction (they went for $4 - $5 million per slot pair; then consider how unlikely it is ANYONE WILL ever get any more slots [with any significant numbers] aside from one airline buying another); their 228 NY & DCA slots are "worth" just about a billion dollars (228 * $4.5 mil), and this is NOT included in Total Assets above! One could buy the airline, sell 27 slots and have the airline for their present value, no premium.
If you wanna jump across the pond out of the NE with your own equipment, you do it from JFK, though BWI could work.
Prepare, because BOHICA, though this time with a little blue juice!

 

[PCL_128]

Trying to value JB based on current assets and market cap is incredibly deceptive. JB is leveraged to the hilt. They have $2.5 billion in long-term debt. It would take them 20 years at last year's earnings to pay off that debt, not counting interest. At nearly $7/share, it's overpriced.

 

[madjack]

LUV is overpriced

 

[Tripower455]

+1

The legacy carriers build their networks around international routes, and half-a** the domestic stuff. WN starts with an incredibly strong domestic network that the legacies can never compare to. If WN can get their house in order in terms of IT department then they could be a serious powerhouse globally.

FWIW, Delta was a very strong domestic (only) carrier until just prior to purchasing Pan Am.

 

[tzskipper]

FWIW, Delta was a very strong domestic (only) carrier until just prior to purchasing Pan Am.

...purchasing "parts" (shuttle and route authorities) of Pan Am, and then effectively allowing the doors to close on the remaining employees who bought into Delta's proposed 45% ownership/codeshare in the "new" Pan Am plan (which the remaining deal was supposed to be)?

Just to clarify...

S

 

[Tripower455]

...purchasing "parts" (shuttle and route authorities) of Pan Am, and then effectively allowing the doors to close on the remaining employees who bought into Delta's proposed 45% ownership/codeshare in the "new" Pan Am plan (which the remaining deal was supposed to be)?

Just to clarify...

S

Yeah, I was there too. No point in rehashing it, as the point was that DAL wasn't, until relatively recently, a "Legacy" international carrier.

 

[tzskipper]

Yeah, I was there too. No point in rehashing it, as the point was that DAL wasn't, until relatively recently, a "Legacy" international carrier.

Agreed.

Have a good weekend.

S

 

[PCL_128]

LUV is overpriced

Yep. And by a huge margin.

 

[maxblast72]

"LUV is overpriced"

Yep. And by a huge margin.

How do you figure? LUV currently trading at 1.4X book value or 13.5X projected 2013 earnings?

BTW, I did agree with your earlier statement on JetBlue. A lot more leverage than LUV or ALK.