Spirit Contract Now

Well it recovered pretty quickly I wonder if the directors bought back a bunch of shares, somebody big did some sale shopping. It got down to around $30.50/share about 15 mins after open today.

Some quick math.

Company has market cap of around $2.3b.
Company has ~$1b in cash on hand
Company makes ~$350m in after tax profit per year and this will most likely continue increasing to about $500m in three years

$2.3-$1 = $1.2b net cost at current trading value

$1.2b / $350m = 3.4 year ROI which is just going off current net income not including the additional 70 airplanes coming their way.

Their numbers are very similar to when Virgin was bought. I wonder if the BOD at jetBlue is running the numbers. I'm sure they're feeling it in FLL with SWA and Spirit both there. This would be a good integration with their Airbus fleet and FLL hub plus Caribbean and LAX flying. Start off at $50/share which is $3.5b but really $2.5b because of their $1b in cash.
 
Oh and one more thing, Spirit's effective tax rate is 38%. 38! A reduction in corp income taxes would benefit them tremendously. If you're a betting man.
 
wheelsup said:
Well it recovered pretty quickly I wonder if the directors bought back a bunch of shares, somebody big did some sale shopping. It got down to around $30.50/share about 15 mins after open today.

Some quick math.

Company has market cap of around $2.3b.
Company has ~$1b in cash on hand
Company makes ~$350m in after tax profit per year and this will most likely continue increasing to about $500m in three years

$2.3-$1 = $1.2b net cost at current trading value

$1.2b / $350m = 3.4 year ROI which is just going off current net income not including the additional 70 airplanes coming their way.

Their numbers are very similar to when Virgin was bought. I wonder if the BOD at jetBlue is running the numbers. I'm sure they're feeling it in FLL with SWA and Spirit both there. This would be a good integration with their Airbus fleet and FLL hub plus Caribbean and LAX flying. Start off at $50/share which is $3.5b but really $2.5b because of their $1b in cash.
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Too much overlap between the two networks, unless the purpose is to cut capacity and get rid of a competitor.

JetBlue merging with Frontier would expand the route map, and have less overlap in the networks.

Frontier has also pushed back their IPO.

My bet is on Frontier.
 
jtrain609 said:
Too much overlap between the two networks, unless the purpose is to cut capacity and get rid of a competitor.

JetBlue merging with Frontier would expand the route map, and have less overlap in the networks.

Frontier has also pushed back their IPO.

My bet is on Frontier.
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Yes I was leaning toward cutting a competitor.

Frontier + Spirit makes sense from a logistics perspective, I can't see Frontier + jetBlue but maybe it will happen. jetBlue wanted Virgin for their west coast presence of which Frontier really doesn't offer. I don't see a big benefit there IMO.
 
wheelsup said:
Yes I was leaning toward cutting a competitor.

Frontier + Spirit makes sense from a logistics perspective, I can't see Frontier + jetBlue but maybe it will happen. jetBlue wanted Virgin for their west coast presence of which Frontier really doesn't offer. I don't see a big benefit there IMO.
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You know JetBlue has a LAX/LGB base and goes to most of the same west coast cities Virgin went to, right?
 
Guidance revisions the past two days should reaffirm that competition is still alive and well in the industry.

The time for JetBlue to acquire Frontier would have been while Frontier was being sold under Republic. Back then it was a cheap asking price and they had relatively similar business models. Now that Frontier has converted to a very profitable ULCC, JetBlue would have to pay a hefty premium, only to undo the business model that fetches that premium. Not an impossible scenario, but seems unlikely and hard to justify.
 
jtrain609 said:
You know JetBlue has a LAX/LGB base and goes to most of the same west coast cities Virgin went to, right?
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Yes but it's not that big compared to BOS and JFK. They wanted the west coast transcon market because it is the most profitable for them. I thought it sounded odd too but that was their reasoning.
 
I'm not holding my breath, that I'll exchange my ID badge anytime soon.

Also, this strike vote tomorrow will be interesting. Sorry, @Cruise , I couldn't vote due to my leave status.
 
Strike Vote Results and Negotiations update on the same day, Tomorrow afternoon is going to be interesting.
 
As I understand it, the nmb told the company and MEC to have an AIP, by the end of tomorrow.

Again, I don't hold my breath for a lot of things.

I was hoping to have a TA by the time I came back, it's not really looking like that will happen.
 
FlySooner9 said:
when are the results of the vote coming?
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I'll save you the suspense. ALPA (or whoever) will report that the Spirit Pilots voted "overwhelmingly" in favor of a strike. Because have you ever once heard of a strike voted that did NOT vote in favor of one? I think it's like testifying in court. You don't call the witness unless you already know what he's going to say.
 
How low will she go? Buy 100 at $25? Buy 50 at $27? Buy Now at 32, Buy nothing at all...??? Oh its more fun than fantasy football!
 
If it goes in the 20 range, I'll buy a 1,000.

Still regret not buying VX when it was in the 20 range. Standalone carrier it went to a high in the mid 40s, with the merger buyout it was 57/share.
 
Cherokee_Cruiser said:
If it goes in the 20 range, I'll buy a 1,000.

Still regret not buying VX when it was in the 20 range. Standalone carrier it went to a high in the mid 40s, with the merger buyout it was 57/share.
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Would have been a good time to buy in the 20-range for sure, but the only reason for the initial run-up from mid-20's to 40's was merger speculation (ran up after Bloomberg report of JBLU / ALK as potential acquirers), not it's strength as a standalone entity. It finally closed at $57/share as that's what ALK paid.
 
Cherokee_Cruiser said:
If it goes in the 20 range, I'll buy a 1,000.

Still regret not buying VX when it was in the 20 range. Standalone carrier it went to a high in the mid 40s, with the merger buyout it was 57/share.
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I looked at VA about a week before the first rumors of the merger happened when it was in the upper 20's. There was zero reason to buy it then. It was fairly priced and certainly didn't warrant any large growth over that price point. It wasn't a value like Spirit is now. You have a confluence of issues going on right now:

1) General company meltdown back in May and labor unrest

2) Pilots strike vote

3) The legacies are aggressively price matching Spirit or even undercutting them, this was an AA thing that stopped Spirit's expansion in its tracks in DFW and now Kirby is doing the same thing at UAL (this is what caused the initial sell off back in July)

4) Hurricane Harvey and now Irma hitting focus cities

5) Jet fuel costs skyrocketing up around $0.50/gal since prior to Harvey and availability is an issue

6) Overall general market pessimism across the board but focusing on transports in general

In other words, lots of risk which is depressing values...some risk will pass but a significant amount remains especially with the TRASMs falling. Wall Street doesn't like falling revenue. At all.
 
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