PenAir

[mshunter]

I offer that if you can't afford market prices, maybe you shouldn't be in the market.

I guess you've never dealt with whipsaw.

 

[ShortField]

I guess you've never dealt with whipsaw.

I think PenAir is unique in the regional world in that they've never really indulged in the whipsaw concept. They obviously underbid their EAS routes and are paying for it now. They're just broke.

 

[Inverted]

I think PenAir is unique in the regional world in that they've never really indulged in the whipsaw concept. They obviously underbid their EAS routes and are paying for it now. They're just broke.

Then they could have renegotiated their EAS contracts. You think somebody else is gonna come in and pick up the pieces and cover these routes? PenAir probably could have named their price. This is bigger than underbidding EAS routes.

 

[ShortField]

Then they could have renegotiated their EAS contracts. You think somebody else is gonna come in and pick up the pieces and cover these routes? PenAir probably could have named their price. This is bigger than underbidding EAS routes.

It's only possible to renegotiate if the carrier and community agree to the same or lower subsidy rate. Also there is a limit to what you can bid in the form of a cap on the subsidy per enplanement.

PenAir's business model going forward seems to be pretty dependent on these EAS routes since the growth in Alaska is pretty limited.

 

[Cessnaflyer]

Change has been very rapid in this industry

I think that can be said for nearly any industry getting locked into long term contracts.

 

[pete2800]

And eating is key to surviving a famine.

Well, it's hard to have sympathy when 5 years ago they could have been planting some crops, so to speak.

 

[Inverted]

It's only possible to renegotiate if the carrier and community agree to the same or lower subsidy rate. Also there is a limit to what you can bid in the form of a cap on the subsidy per enplanement.

PenAir's business model going forward seems to be pretty dependent on these EAS routes since the growth in Alaska is pretty limited.

I would say that PenAir doesn’t plan on having a business model. They are gutting the company a considerable amount in terms of saving something, but this is before they throw the final ore over the side.

 

[alaskadrifter]

Whelp, things just got more interesting.
http://www.ktuu.com/content/news/Ravn-Alaska-to-fly-to-southwest-463721333.html

 

[ASpilot2be]

This should make things interesting.

 

[alaskadrifter]

This should make things interesting.

I’m guessing it’s a bargaining tactic, but I’ll be happy to have a job after the holidays.

 

[ASpilot2be]

I’m guessing it’s a bargaining tactic, but I’ll be happy to have a job after the holidays.

Hopefully it works out for everybody. But I see interesting times ahead. Penair can't charge whatever they want anymore.

 

[z987k]

Hopefully it works out for everybody. But I see interesting times ahead. Penair can't charge whatever they want anymore.

Ravn is probably forcing a cheap sale.

 

[alaskadrifter]

October 5 we find out.

‘PenAir is not going away’ Airline CEO answers questions about upcoming auction

 

[z987k]

Does PenAir even own an airplane or are they all leased or close to 100% financed?

 

[FloridaLarry]

Wexford Capital is a $7B investment operation, based in Greenwich, CT. They have a long history of investing in airlines, including Midway and Republic (among others). Their funds have invested in things like Macy's, Famous Dave's BBQ and Tiffany, among many others.

I couldn't find a lot of success in their airline investments - maybe they just do it to collect losses to offset their successes in other industries .

Good luck to the plucky folks at PenAir.

 

[alaskadrifter]

Does PenAir even own an airplane or are they all leased or close to 100% financed?

I don’t think they own anything, I think all the planes are leased.

 

[z987k]

I don’t think they own anything, I think all the planes are leased.

So what are they auctioning? The certificate and a couple buildings?

 

[alaskadrifter]

So what are they auctioning? The certificate and a couple buildings?

Not even. Buildings are owned by a different corporation. Guessing the certificate and some ground equipment.

 

[z987k]

Not even. Buildings are owned by a different corporation. Guessing the certificate and some ground equipment.

So they have millions in debt and maybe 100k in assets. Nice.

 

[alaskadrifter]

So they have millions in debt and maybe 100k in assets. Nice.

The 121 certificate is worth quite a lot on its own. The FAA doesn’t just hand those out. The only bidder so far has said they will keep Penair operational.