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Topic: Alaska CEO: "Staying Independent Is Right Strategy"
Username: g500
Posted 2014-03-28 03:07:46 and read 9362 times.

I think Alaska's CEO is sending DL, AA, UA and Southwest a message:

"Don't even think about it"

http://atwonline.com/trade-shows-amp...staying-independent-right-strategy

Topic: Alaska CEO: "Staying Independent Is Right Strategy"
Username: F9Animal
Posted 2014-03-28 03:17:31 and read 9353 times.

Good for him to come out and lay it out. It certainly will relieve the Alaska takeover threads that pop up often. I prefer Alaska to stay solo, and continue growing. The airline has tons of growth potential, is profitable, and has a very loyal customer base. I have not always agreed with their prior labor behaviors, but they have remained committed to their employees since.

Topic: Alaska CEO: "Staying Independent Is Right Strategy"
Username: RWA380
Posted 2014-03-28 03:39:55 and read 9267 times.

I hope this settles some pretty crazy conclusions that have come about due to this exact topic being re-hashed over and over again.

Please everyone who has a rat in this race, please read the article attached. AS does not want to be anything but AS. I am glad this has been said, and IMHO, it is the best thing for AS, and all of the communities that depend on them.

Especially for the bigger hub cities (PDX, SEA) we also depend on AS for an ever increasing roster of non-stop destinations, as well as unique beverages & overall superb in flight service. In return you have the loyalty of an ever growing segment of the country.

All this with a pretty young 737 fleet, receiving new aircraft allowing AS to expand in all directions. I think the AS of the 80s is no longer a big fish in a small pond, they are now a robust fish in a big pond. Happy independant swimming for many years to come.

I also like that AS is not ignoring WN advancements, and starting BWI & ABQ, WN jumped into SAN-SEA, and AS had the ability to hop into some new markets that have been grown by WN.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: g500
Posted 2014-03-28 05:01:32 and read 9094 times.

The problem is that AA, UA, DL and Southwest are far larger. They could still try a hostile take-over and there won't be much Alaska's CEO could do to stop it

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: RWA380
Posted 2014-03-28 05:16:56 and read 9021 times.

Quoting g500 (Reply 3):

The problem is that AA, UA, DL and Southwest are far larger. They could still try a hostile take-over and there won't be much Alaska's CEO could do to stop it

I see it pretty unlikely that the DOJ would approve the merger of any of the 3 US mega carriers with AS. AS is often used as an example of the type of independent carriers that the marketplace needs to keep things honest.

I am positive DL has far too many overlapping markets now, UA is showing they have little interest in the Pacific Northwest, WN has it's focuses elsewhere, while it finally digests the rest of FL, AA is not even close to finishing their merger with US. Remember AS has a healthy bank account, and very happy employees & shareholders, the hostile takeover cost would be huge, the process would be very protracted.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: commavia
Posted 2014-03-28 05:25:16 and read 8993 times.

Quoting RWA380 (Reply 4):
I see it pretty unlikely that the DOJ would approve the merger of any of the 3 US mega carriers with AS. AS is often used as an example of the type of independent carriers that the marketplace needs to keep things honest.

I am positive DL has far too many overlapping markets now, UA is showing they have little interest in the Pacific Northwest, WN has it's focuses elsewhere, while it finally digests the rest of FL, AA is not even close to finishing their merger with US. Remember AS has a healthy bank account, and very happy employees & shareholders, the hostile takeover cost would be huge, the process would be very protracted.

I agree. Given the level of regulatory scrutiny the recent AA-USAirways merger garnered, I am highly skeptical that a takeover of Alaska - hostile or otherwise - by any of America's "big four" - would receive antitrust approval, at least without substantial carveouts and divestitures.

From the perspective of both direct route overlap and general market access, Alaska is simply too big to be taken over by Delta, Southwest or United. The only one of the "big four" that doesn't have substantial overlap with Alaska is AA, and there, too, I think the combined airline would be too large overall for regulators to accept.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: MIflyer12
Posted 2014-03-28 05:51:17 and read 8873 times.

Quoting RWA380 (Reply 4):
Remember AS has a healthy bank account, and very happy employees & shareholders, the hostile takeover cost would be huge, the process would be very protracted.

You can persist in the delusion that AS is too big/expensive to take over. A slide from AS' very own February 2014 investor deck shows it differently.

ALK management's duty to inform shareholders is thus met: other carriers are so much bigger that AS' market cap is not an impediment.

http://i1154.photobucket.com/albums/p521/ft3cforme/asmktcap_zps397e3ae8.png

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: william
Posted 2014-03-28 06:27:41 and read 8746 times.

Quoting MIflyer12 (Reply 6):
You can persist in the delusion that AS is too big/expensive to take over. A slide from AS' very own February 2014 investor deck shows it differently.

ALK management's duty to inform shareholders is thus met: other carriers are so much bigger that AS' market cap is not an impediment.



Just as delusional in thinking the DOJ will approve any merger or buyout in this climate of so few competitors.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: enilria
Posted 2014-03-28 07:17:03 and read 8552 times.

Quoting william (Reply 7):
Just as delusional in thinking the DOJ will approve any merger or buyout in this climate of so few competitors.

I've given up on any rational hopes for the DOJ. They are morons.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: alfa164
Posted 2014-03-28 07:36:24 and read 8434 times.

Quoting william (Reply 7):
Just as delusional in thinking the DOJ will approve any merger or buyout in this climate of so few competitors.

Yeah... they sure did a great job blocking tha AA-US merger...

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: Mir
Posted 2014-03-28 07:38:41 and read 8414 times.

Quoting alfa164 (Reply 9):
Yeah... they sure did a great job blocking tha AA-US merger...

I didn't want that merger to happen, but even I have to admit that there were far more grounds for AA/US than any of the majors and AS.

-Mir

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: DeltaMD90
Posted 2014-03-28 09:02:35 and read 8173 times.

Hardly news to anyone sane. Unfortunately, I don't think this will quell the rumors and wild speculation

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: PlanesNTrains
Posted 2014-03-28 09:17:16 and read 8116 times.

DeltaMd90, I take issue with your "sane" comment. I'm not sure why it's become so easy to disparage the viewpoints of others on this forum, but it's not really necessary IMHO.

Alaska doesn't want to merge. Not surprising. That only changes the friendly versus unfriendly nature of any potential buyout scenario. In other words: Makes it more expensive and somewhat messy. That has been the mantra from folks who fear a buyout for quite some time.

I for one hope that a merger doesn't happen. I can't see flights to OMA, TPA, SAT, etc lasting from SEA under many scenarios. BUT - Alaska is not guaranteed having their wish for continued independence go unchallenged.

-Dave

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: travelmanager
Posted 2014-03-28 09:29:12 and read 8061 times.

Quoting g500 (Thread starter):
It certainly will relieve the Alaska takeover threads that pop up often

Yes, for a week or so  
Joking aside, it is pretty clear that they have been able to achieve the results that they have because their business model has worked very well with the market dynamic. While I don't doubt that they will remain independent, I truly expect them to have to make a stronger affiliation decision shortly.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: jetjack74
Posted 2014-03-28 10:16:06 and read 7916 times.

Quoting william (Reply 7):
Just as delusional in thinking the DOJ will approve any merger or buyout in this climate of so few competitors.
Quoting alfa164 (Reply 9):
Yeah... they sure did a great job blocking tha AA-US merger...

Yes this illusion that somehow this administration is "antibusiness" is getting very stale. The Obama Admi s only "Anti-bigbusiness" when those businesses aren't greasing their BO's palms.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: AADFWFlyer
Posted 2014-03-28 10:25:24 and read 7880 times.

Quoting enilria (Reply 8):


Agreed - total morons - as evident by their inputs on the latest merger of AA/US - they are clueless.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: par13del
Posted 2014-03-28 10:25:42 and read 7880 times.

Quoting RWA380 (Reply 2):
I hope this settles some pretty crazy conclusions that have come about due to this exact topic being re-hashed over and over again.

Ah, not for me, I am waiting for the Monday announcement - you know today state everything is fine build and keep client / investor confidence, 48 hours later a disaster announcement. 

If a week or two passes with nothing then yes, I will support the statement that some speculation should end.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: seabosdca
Posted 2014-03-28 10:32:53 and read 7851 times.

Quoting F9Animal (Reply 1):
It certainly will relieve the Alaska takeover threads that pop up often.

   That will never happen.

Antitrust issues aside, I'm skeptical that a takeover will happen because I don't think it would be good business. AS has created value through its overlapping relationships that would be destroyed if it were merged into DL or AA. And either DL or AA would have trouble operating a good chunk of AS's network at a profit. That said, I'm not totally sure that DL's recent moves against AS reflect dispassionate business judgment, so perhaps DL would try to strong-arm AS into a deal.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: AADFWFlyer
Posted 2014-03-28 10:33:31 and read 7849 times.

Quoting par13del (Reply 16):

What is the Monday announcement?

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: PlanesNTrains
Posted 2014-03-28 11:04:09 and read 7734 times.

One reason Alaska will continue to be viewed as a potential takeover target is that, quite simply, there just aren't many such targets left to speculate about. NK, VX, F9, G4 - they just aren't likely takeover targets relative to an AS, HA, or B6, at least to me. As we get ever larger mega carriers and ever fewer "national" carriers, there are going to be carriers that we will focus on more.

-Dave

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: surfdog75
Posted 2014-03-28 11:15:53 and read 7696 times.

DLs not interested. They were maybe, but they're now committed to their own western network and getting more space in SEA. Much better for the employees of both companies in the long run.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: 175erj
Posted 2014-03-28 11:19:11 and read 7679 times.

Quoting PlanesNTrains (Reply 12):

Who cares about a merger, its more likely to be an acquisition.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: yellowtail
Posted 2014-03-28 11:44:48 and read 7445 times.

These sorts of statements are about as good in time as your next medical checkup…….say 24 hours.

In the end the CEO can say all he wants, the shareholders are the ones that really own the company and will dictate its future. Only takes one activist shareholder to get the ball rolling.

Bankers and financiers care little about "loyal flyers". They are in the business to make money and if a buyout or merger with another carrier makes them a few million, they will push it.

Quoting g500 (Reply 3):

The problem is that AA, UA, DL and Southwest are far larger. They could still try a hostile take-over and there won't be much Alaska's CEO could do to stop it

Or pound them into submission or acquisition.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: PlanesNTrains
Posted 2014-03-28 11:54:07 and read 7361 times.

Quoting 175erj (Reply 21):

I'm using "merger" as representative of a transaction that combines the two entities, be that a friendly merger, an unwanted takeover, or whatever.

Beyond that, I can't answer your question about "who cares"....

- Dave

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: cschleic
Posted 2014-03-28 11:56:09 and read 7330 times.

[quote=MIflyer12,reply=6]You can persist in the delusion that AS is too big/expensive to take over. A slide from AS' very own February 2014 investor deck shows it differently.

ALK management's duty to inform shareholders is thus met: other carriers are so much bigger that AS' market cap is not an impediment.[/quote

At the same time, market cap has to be viewed relative to revenue, net income and cash flow. Sure, they're smaller than most of the others, but if market price is a high multiple of earnings, then it might not make business sense to acquire them....better to use the money somewhere else.

Berkshire Hathaway's Class A price of $185,000/share may seem outrageous, but it's 15 times earnings. Of course, there can be other reasons to acquire someone.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: rwy04lga
Posted 2014-03-28 12:17:28 and read 7558 times.

Quoting g500 (Reply 3):
The problem is that AA, UA, DL and Southwest are far larger. They could still try a hostile take-over and there won't be much Alaska's CEO could do to stop it

Yep, AS has no say in the matter.

Quoting RWA380 (Reply 4):
I see it pretty unlikely that the DOJ would approve the merger of any of the 3 US mega carriers with AS.

Again, AS has no say in the matter.

No matter what the AS CEO spouts, his statement is irrelevant outside Alaska. Perhaps he'll run for governor once he's ousted.

If DL wants AS, only the DOJ can stop it. If DL has to divest, they'll confine AS ops to ALASKA and feed that subsidiary through ANC. No codeshare or interline agreements with other airlines. Today AK...tomorrow WS!! Muah ha ha ha ha.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: commavia
Posted 2014-03-28 12:27:21 and read 7492 times.

Quoting rwy04lga (Reply 25):
Yep, AS has no say in the matter.
Quoting rwy04lga (Reply 25):
Again, AS has no say in the matter.

No matter what the AS CEO spouts, his statement is irrelevant outside Alaska. Perhaps he'll run for governor once he's ousted.

If DL wants AS, only the DOJ can stop it. If DL has to divest, they'll confine AS ops to ALASKA and feed that subsidiary through ANC. No codeshare or interline agreements with other airlines.

I have no idea where this notion is coming from that Alaska has "no say" in whether or not it's taken over, or that its CEO is "irrelevant," or that "only the DOJ" could stop a hostile takeover. That's ridiculous.

Can the CEO, alone, independent of the Board and shareholders, prevent a hostile takeover? No, of course not. But to say that the CEO, and other company constituencies have "no say," and no influence, over such an outcome is completely false. Alaska's CEO and Board absolutely have multiple tools at their disposal, should they choose to use them, to complicate things for Delta or any other prospective acquirer.

And, then, of course, there is again the issue of regulatory approval - which I continue to maintain would be extraordinarily difficult to obtain for any of the nation's big four, and particularly Delta considering the amount of direct, competing overlap.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: ER757
Posted 2014-03-28 12:29:07 and read 7691 times.

Quoting F9Animal (Reply 1):
It certainly will relieve the Alaska takeover threads that pop up often
Quoting RWA380 (Reply 2):
I hope this settles some pretty crazy conclusions that have come about

You don't come around here very often do you?
 

Can't even go more than a few posts in this thread before some are saying "yeah, but......."

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: tortugamon
Posted 2014-03-28 12:41:16 and read 7520 times.

Its not his decision, its the shareholders. And any CEO anywhere would say the same thing. It is the worst idea up until its the only idea.

I would like to see further consolidation so that these guys can start making real money (this past year exempted) and so they can make the investments that they need in airports and aircraft so they can better compete on the global stage. If I lived in a secondary city or smaller I may not feel the way that I do.

tortugamon

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: TVNWZ
Posted 2014-03-28 12:46:04 and read 7478 times.

Interesting. The fact he had to say it can mean he has been approached. And the reply could mean "your offer isn't good enough." Lots of mergers start the way this is playing out. Not over yet.

And if DL wants them. It can happen and the DOJ would have very little reason to say no. AK's investor slide posted above still shows 7 competitors of various sorts even if AK sells/is bought/merged.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: commavia
Posted 2014-03-28 12:52:35 and read 7452 times.

Quoting tortugamon (Reply 28):
Its not his decision, its the shareholders.

That's true. What's not true is that the CEO has "no" say or influence.

Quoting TVNWZ (Reply 29):
It can happen and the DOJ would have very little reason to say no.

Little reason except for the fact that Delta is now or soon will be offering nonstop service competitive with Alaska on many of the busiest domestic routes in and out of SEA. Given the level of scrutiny AA-USAirways received, despite the fact the level of overlap, I am highly skeptical that DOJ would permit Delta to become even larger and remove yet another competitor. I suspect the merger window in the airline industry has closed, at least for the "big four," all of whom have digested large competitors in the last decade. And of course this particular merger would also attract a very large amount of political attention - particularly from the Alaska, Oregon and Washington delegations (among others).

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: raddek
Posted 2014-03-28 13:36:16 and read 7113 times.

AS may have a very loyal flyer base in SEA and what not, but as the airlines with much deeper pockets continue to grow in somewhere like SEA, they will begin to bleed money on routes. They can only bleed money for so long before shareholders become fed up and start looking at ways to get rid of their money losing shares. Just wait for the ROI to begin dropping in a few years and then we can all talk.

Right now AS is begning to feel the pinch by DL in SEA. Also, WN is not going to back down from their markets either.

I am not talking about a merger or anything like that. All it takes is a few of the bigger airlines to keep growing and putting a squeeze on the markets out of SEA for AS. It is much like what is happening to F9 in DEN. They are slowly being squeezed out.

Once the big carriers have a target put on the back of your airline, you better go down swining because the odds of long term survival are not likely.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: Tusdawg23
Posted 2014-03-28 14:23:31 and read 6797 times.

The talk of AS being purchased by a bigger carrier has been talked about ad nauseum on these forums. I think it's maybe at #2 behind when Northwest(which later evolved to DL) would retire the DC-9's. AS is a well run airline that offers tremendous value to its customers and operates in a very niche market (Alaska) where they have developed a deep rooted loyalty for their product and are the only show in town in many smaller communities. I think it's safe to say AS is safe from any hostile takeover bids for the remainder of the decade considering the fact it would never get past the DOJ and the mountain of political firestorm that would ensue from communities in the Northwest as stated above.

This leaves the big boys only one choice and that's to go head to head with AS and try and slowly take apart their market share starting with the SEA hub. DL has the most resources at its disposal to certainly put a dent in the SEA domestic operation and has been showing they arent afraid to compete with AS, but I think it will be a long and drawn out affair. DL has an obvious edge in the international market out of SEA, but things will really begin to heat up when DL starts flying more of its own metal out of SEA on domestic routes rather than dipping its toes in the swimming pool with a few RJ flights between SEA and its non-hub cities.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: seabosdca
Posted 2014-03-28 14:32:00 and read 6783 times.

My question is how much more DL can provoke AS before AS cuts them off and jumps into bed with UA. UA has not been all that interested in the Northwest of late, and I think they could derive a lot of advantages from an AA-style arrangement with AS.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: raddek
Posted 2014-03-28 14:43:42 and read 6672 times.

Quoting Tusdawg23 (Reply 32):
This leaves the big boys only one choice and that's to go head to head with AS and try and slowly take apart their market share starting with the SEA hub. DL has the most resources at its disposal to certainly put a dent in the SEA domestic operation and has been showing they arent afraid to compete with AS, but I think it will be a long and drawn out affair. DL has an obvious edge in the international market out of SEA, but things will really begin to heat up when DL starts flying more of its own metal out of SEA on domestic routes rather than dipping its toes in the swimming pool with a few RJ flights between SEA and its non-hub cities.




My point exactly. The bleeding for AS has begun and as long as DL has an interest there to keep growing, it will continue. But all the people online here should not keep ignoring what WN is going to do here in this war as well. They are not going to just take a backseat and watch, They will act on anything they feel will make money. Out of the whole WN network, the Northwest is that last part of the country where they are weak.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: commavia
Posted 2014-03-28 14:50:55 and read 6607 times.

Quoting raddek (Reply 34):
But all the people online here should not keep ignoring what WN is going to do here in this war as well. They are not going to just take a backseat and watch,

That would be "interesting" (being charitable) to watch. Southwest has managed to stretch AirTran out to among the most ridiculously-protracted merger integrations in airline industry history, and without even having finished that yet they would take over Alaska? I'm not holding my breath.

The political opposition would be absolutely immense given that there is no way Southwest would continue operating the Horizon service to all the small Pacific Northwest communities or the small Alaska towns, many of both of which rely heavily (or entirely) on Alaska. And, again, there's the regulatory hurdle, which I continue to believe would be high - particularly for Southwest (the more airlines Southwest takes over, the harder it would be, in my view, for them to continue using the whole "underdog" P.R. song and dance).

[Edited 2014-03-28 14:52:08]

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: BoeingGuy
Posted 2014-03-28 15:03:45 and read 6526 times.

Quoting raddek (Reply 31):
Once the big carriers have a target put on the back of your airline, you better go down swining because the odds of long term survival are not likely.

I doubt DL will squeeze out AS.

Quoting raddek (Reply 34):
The bleeding for AS has begun and as long as DL has an interest there to keep growing, it will continue.

Does anyone have any numbers as to whether DL is putting a dent in AS's market share and profitability? Or is DL just like a mosquito that AS can swat away?

The loyal AS fliers can easily ensure DL doesn't make their odds of long term survival. Just vote with their pocket books and fly AS on the routes they now compete in. That may yet happen.

Unfortunately, at times the American public shows they aren't intelligent enough to look at the long term picture. You know, instead of continuing to support local merchants, they'll buy at WalMart because they can save 50 cents in the short run. Then when the local merchants are all out of business, the same people complain that they don't have the same good service or choices from the local guys anymore.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: yellowtail
Posted 2014-03-28 15:13:02 and read 6461 times.

Quoting raddek (Reply 34):
My point exactly. The bleeding for AS has begun and as long as DL has an interest there to keep growing, it will continue. But all the people online here should not keep ignoring what WN is going to do here in this war as well.

Hypothetically, WN may see the DL move in SEA as an opportunity to do a little squeezing of AS themselves (of course they can't talk to DL about it, cause that would be illegal).

IMHO, WN would much rather see DL in SEA than AS and may start to do its "part". If two the carriers start to systematically attack AS…..might be good time to start thinking about dumping your AS shares…..

As much as love the folks at AS (got some good friends there), business is never pretty and only the strongest survive. We have seen it time and time again with small niche carriers. Instead of farting around with Hawaii over the last few years, AS should have been expanding rapidly, internationally even.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: seabosdca
Posted 2014-03-28 15:13:42 and read 6490 times.

Quoting raddek (Reply 34):
But all the people online here should not keep ignoring what WN is going to do here in this war as well. They are not going to just take a backseat and watch, They will act on anything they feel will make money. Out of the whole WN network, the Northwest is that last part of the country where they are weak.

Speaking as a SEA consumer, so far it appears to me that they have had little interest in trying to compete here. I can't remember the last time that a WN fare out of Seattle was competitive with the competition. If I'm flying to one of their destinations, I always check -- and I always end up disappointed.

They would have to decide to offer competitive fares in order to strengthen their position. So far they just don't seem interested -- they really are "taking a backseat and watching."

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: raddek
Posted 2014-03-28 15:19:31 and read 6413 times.

Quoting commavia (Reply 35):
Southwest has managed to stretch AirTran out to among the most ridiculously-protracted merger integrations in airline industry history, and without even having finished that yet they would take over Alaska?



Who said that WN would take over AS? I never said those two would merge. All I am saying is that WN will be looking at what AS and DL are doing and jump in on routes where they can make money on too.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: raddek
Posted 2014-03-28 15:28:59 and read 6325 times.

Quoting yellowtail (Reply 37):
Hypothetically, WN may see the DL move in SEA as an opportunity to do a little squeezing of AS themselves (of course they can't talk to DL about it, cause that would be illegal).

IMHO, WN would much rather see DL in SEA than AS and may start to do its "part". If two the carriers start to systematically attack AS…..might be good time to start thinking about dumping your AS shares…..




I see that myself. AS is the small carrier and there is almost no way they could survive an onslaught of two juggernauts coming in there and taking your business. The AS business model of just staying on the west coast and be cautious with their expansion may have hurt them in the long run. But time will tell.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: BoeingGuy
Posted 2014-03-28 16:02:07 and read 6189 times.

Quoting yellowtail (Reply 37):
Instead of farting around with Hawaii over the last few years, AS should have been expanding rapidly, internationally even.

Yeah, AS has only been farting around with Hawaii the past few years (cough cough. PHL, TPA, MSY, SAT, MCI, MSP, DTW, BWI, SLC, ABQ and a number of connect the dot routes).

No they shouldn't have been expanding rapidly. They've done exactly the right thing, unlike bad growth like American West flying 747s to Japan or Braniff's suicidal expansion way back when. And AS's business market is an all 737 carrier, not an overseas widebody carrier.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: DeltaMD90
Posted 2014-03-28 16:04:26 and read 6135 times.

Quoting BoeingGuy (Reply 41):
No they shouldn't have been expanding rapidly. They've done exactly the right thing,

   AS has done an excellent job so I would agree they are doing more than one thing correctly. Often over/quick expansion leads to disastrous results. I only see them expanding in the East even more in the future

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: EA CO AS
Posted 2014-03-28 16:28:30 and read 6056 times.

Quoting MIflyer12 (Reply 6):
You can persist in the delusion that AS is too big/expensive to take over. A slide from AS' very own February 2014 investor deck shows it differently.

ALK management's duty to inform shareholders is thus met: other carriers are so much bigger that AS' market cap is not an impediment.

Remember that DL's CEO and BOD has a fiduciary responsibility to their shareholders to use their money wisely; while ALK at just shy of $6B is a small fraction of DL's $28B cap, it also means that - with a significant premium investors would demand to dump ALK shares - DL would need to come up with somewhere around $9B to buy ALK; nearly 3X what they spent on NW. Bottom line; at present, ALK is not a good value proposition for DL.

Is DL trying to change that by building their SEA presence and trying to hurt ALK's value in the process? Probably - it's no secret that DL has 11 (soon to be 13) gates at SEA and has gone to the Port of Seattle asking for a total of 30. And this new competition from DL easily represents the single biggest competitive threat in Alaska's existence.

But AS has continuously shown the resolve to learn and grow through these trials, and Brad is the first to say they'll come through this as a better carrier.

Quoting commavia (Reply 26):
to say that the CEO, and other company constituencies have "no say," and no influence, over such an outcome is completely false. Alaska's CEO and Board absolutely have multiple tools at their disposal, should they choose to use them, to complicate things for Delta or any other prospective acquirer.

  

AS is actively getting every level of Leadership in the company on the same page and ensuring that executing daily on their "Five Focus Areas" is key in every employee's mind:

o Safety and Compliance
o People Focus
o Hassle-Free Customer Experience
o Energetic and Compelling Brand
o Low Fares, Low Costs and Network Growth

AS is rallying the entire company, from the top-down, against DL. That's going to ultimately be how AS out-executes DL in the SEA market; DL doesn't have as much to lose, so all the people at AS will fight much harder (and hopefully, smarter) than DL.

Lastly, the loyal AS FF base is showing their allegiance to AS while DL members are doing status matches and joining AS in droves. DL is trying to win over the local market but hasn't made much of a dent so far.

[Edited 2014-03-28 16:46:01]

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: RDUDDJI
Posted 2014-03-28 16:30:01 and read 6012 times.

Quoting commavia (Reply 30):

That's true. What's not true is that the CEO has "no" say or influence.

Well, he can say whatever he wants, but it's the board and shareholders who would vote on a buyout. If enough money is thrown at them, they'll sellout.

As far as regulatory approval, prior to AA/US I would have said no way. Who would've thought the DOJ would allow the country's second largest LCC to be bought up... But then again, the current DOJ has shown they will approve just about anything...

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: commavia
Posted 2014-03-28 16:47:02 and read 5892 times.

Quoting RDUDDJI (Reply 44):
Well, he can say whatever he wants, but it's the board and shareholders who would vote on a buyout.

No argument. But that wasn't the earlier statement - which stated, multiple ways multiple times, that the CEO had "no" say in the matter. And that's just false. He doesn't have all the say, but he doesn't have none of it, either. Staging a hostile takeover of a company with opposed management is often quite difficult.

Quoting RDUDDJI (Reply 44):
Who would've thought

Me! And many other people. Indeed, it seems that the DOJ challenge to the AA/USAirways merger came as a very big surprise to most of the people involved, and most industry analysts.

Quoting RDUDDJI (Reply 44):
the DOJ would allow the country's second largest LCC to be bought up

USAirways was not the nation's second largest "LCC." That was a ticket symbol. In reality, USAirways' cost structure and behavior was far more like a network/legacy carrier than an "LCC," which of course is why it does not appear that any portion of the regulatory/antitrust review apparatus ever viewed it as such - that moniker was P.R., not economic reality.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: Prost
Posted 2014-03-28 17:12:59 and read 5803 times.

I just googled to see if Alaska Airlines had a 'poison pill' which would make it difficult for someone to purchase them. They had one, which their shareholders pressured them to remove back in 2002.

I like Alaska Airlines a lot, and I speak as a Delta employee here. They are a great airline, great employees, and they provide very hearty competition. My fear isn't that Alaska Airlines gets taken over by another airline, but that after a period of 12-18 months of enhanced competition in their core SEA market, they get taken over by a hedge fund structure. Those guys can be brutal to airlines.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: cschleic
Posted 2014-03-28 20:23:40 and read 4924 times.

Quoting EA CO AS (Reply 43):
Remember that DL's CEO and BOD has a fiduciary responsibility to their shareholders to use their money wisely; while ALK at just shy of $6B is a small fraction of DL's $28B cap, it also means that - with a significant premium investors would demand to dump ALK shares - DL would need to come up with somewhere around $9B to buy ALK; nearly 3X what they spent on NW. Bottom line; at present, ALK is not a good value proposition for DL.

I was getting at this in an earlier post. Looking at values as a multiple of EBITDA (earnings before interest, taxes and depreciation/amortization, one cash flow measure used by many companies), various companies look like this, using today's figures from yahoo finance, market cap as a multiple of recent 12-months EBITDA:
- Alaska - 6.9x.
- Delta - 5.6x.
- United - 4.7x.
- American - 5.6x.
- Southwest - 7.3x.
- McDonald's - 9.6x.
- Exxon - 6.9x.

From a capital allocation standpoint, Delta would be better off investing in itself, which it is doing very nicely these days, or - if they felt they had to invest in another company - even buying Exxon stock, which is trading at the same multiple as ALK but in a much more stable industry. And that's before the premium they'd have to pay for ALK, which would make it less economic, although there would be synergies and cost reductions. Interestingly, Southwest trades at a higher multiple.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: RWA380
Posted 2014-03-28 20:37:25 and read 4839 times.

Quoting ER757 (Reply 27):
You don't come around here very often do you?

Far more than I should .... But your comment did make me laugh.

Quoting raddek (Reply 31):
I am not talking about a merger or anything like that. All it takes is a few of the bigger airlines to keep growing and putting a squeeze on the markets out of SEA for AS. It is much like what is happening to F9 in DEN. They are slowly being squeezed out

Come on, F9 is no AS, F9 is barely keeping it's head above water turning into a ULCC with a far weaker route structure than a healthy and robust AS. DL can not "squeeze" AS, if there isn't enough gate space at SEA/TAC to grow into.

Quoting raddek (Reply 31):
WN is not going to back down from their markets either.

You mean like SEA-BOI, SEA-SLC, SEA-RNO, SEA-GEG, PDX-GEG, PDX-BOI, PDX-SLC & PDX-RNO?

Quoting seabosdca (Reply 33):
My question is how much more DL can provoke AS before AS cuts them off and jumps into bed with UA. UA has not been all that interested in the Northwest of late, and I think they could derive a lot of advantages from an AA-style arrangement with AS.

Not UA, they have OO doing this flying for them, UA doesn't need AS on the west coast.

Quoting raddek (Reply 34):
Out of the whole WN network, the Northwest is that last part of the country where they are weak.

Because they retreated from routes like - SEA-BOI, SEA-SLC, SEA-RNO, SEA-GEG, PDX-GEG, PDX-BOI, PDX-SLC & PDX-RNO for example.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: slcdeltarumd11
Posted 2014-03-28 21:32:36 and read 4633 times.

We all know the government wont let DL or AA or UA merge with AS anytime soon. That is all an a.net fantasy and doesn't reflect reality in anyway. Its mostly delta fanatics who want them to take over AS or people who still think mergers will keep happening till we have one airline called delta airlines flying the entire world.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: Schweigend
Posted 2014-03-28 22:02:22 and read 4488 times.

As I recall, a few years ago, AS was fairly consistently buying back its own stock.

I don't know if this is still the case, and I probably don't understand these matters well, but what percentage of Alaska's outstanding stock is owned by AS itself, and couldn't they just buy back their stock to prevent a hostile takeover?

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: raddek
Posted 2014-03-29 00:04:55 and read 4184 times.

Quoting RWA380 (Reply 48):
You mean like SEA-BOI, SEA-SLC, SEA-RNO, SEA-GEG, PDX-GEG, PDX-BOI, PDX-SLC & PDX-RNO?

The strategy for WN has changed. We all know that. These were short haul markets that they cut mainly to free up planes for all the stuff that is going on with their DCA and LGA slots and the Wright Amendment. These routes may come back to SEA in the future.

See, unlike AS, a full domestic airline has an operation nationwide, versus all their eggs in one basket like AS does on the west coast. I find it laughable that AS is going to SLC and think they are going to accomplish anything there. Just a waste of planes.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: RWA380
Posted 2014-03-29 00:13:27 and read 4173 times.

Quoting raddek (Reply 51):
I find it laughable that AS is going to SLC and think they are going to accomplish anything there.

It has been established in previous threads about this same exact subject, that SLC expansion was on the radar for AS before the change of relationship with DL. AS does not just knee jerk routes out, they do their homework well in advance.
Only a privy few know why AS chose to start flights from SLC, but you can be sure whatever does not work, will get cut.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: par13del
Posted 2014-03-29 05:38:45 and read 3783 times.

Quoting tortugamon (Reply 28):
I would like to see further consolidation so that these guys can start making real money (this past year exempted) and so they can make the investments that they need in airports and aircraft so they can better compete on the global stage.

Interesting, competing on the global stage means automatic competition from local carriers, only the smaller less developed nations are being "encouraged" to not support and fund national or local carriers.
So you have one of the largest domestic markets now with only local competition, to better compete on the global stage in addition to better service you are going to also need more pax on the US side, Americans are not too
popular all over the world to see your citizens banging down the doors to abandon domestic vacations for international ones.

The domestic market is free, and most just tend to follow others to their demise, at times it look as if they want someone to mandate the pax choices so that they can make money in spite of themselves.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: n7371f
Posted 2014-03-30 15:59:30 and read 3127 times.

Quoting raddek (Reply 51):
The strategy for WN has changed. We all know that. These were short haul markets that they cut mainly to free up planes for all the stuff that is going on with their DCA and LGA slots and the Wright Amendment. These routes may come back to SEA in the future.

See, unlike AS, a full domestic airline has an operation nationwide, versus all their eggs in one basket like AS does on the west coast. I find it laughable that AS is going to SLC and think they are going to accomplish anything there. Just a waste of planes.

Totally incorrect. Southwest did not make money on these routes and the dye was cast long before LGA even came into focus. Many of the routes listed were cut over two years ago. Southwest cannot make money any more on many of the shorthaul flights that used to be bread and butter - their costs are too high and the yields can't keep up.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: tortugamon
Posted 2014-03-30 16:24:25 and read 3051 times.

Quoting par13del (Reply 53):

I read your post three times and I have to admit to not understanding one bit of it.

I was suggesting that if US carriers make more money they will be able to buy newer aircraft and make their current aircraft better which should allow them to compete with international carriers; many of whom are flying better equipped aircraft. I am not very optimistic about them competing from a service standpoint but maybe the increased profit could help them do that as well.

tortugamon

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: harim
Posted 2014-03-30 18:34:06 and read 2878 times.

The CEO does not have much say - the larger investors and their representatives do (the board).

For all we know the CEO is saying 'independent' in order to ramp up any neotiations on price.

No emotions ---- cold hard decisions on what can bring the largest returns.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: PlanesNTrains
Posted 2014-03-31 01:02:06 and read 2585 times.

Quoting raddek (Reply 51):
The strategy for WN has changed.

Exactly. Today's Southwest is far different from the WN of even 10 years ago. They are far less flexible than they once were and are not in a position to entertain routes like PDX-GEG or SEA-RNO just because. They have larger planes coming on line, higher costs, are dealing with a lot of bigger fish, and are just simply not the same airline.

Quoting raddek (Reply 51):
These routes may come back to SEA in the future.

Could they come back to these routes? Of course. Will they? Not likely, at least in any meaningful way.

Quoting raddek (Reply 51):
See, unlike AS, a full domestic airline has an operation nationwide, versus all their eggs in one basket like AS does on the west coast.

Yes. Alaska is not a "full domestic airline". They are hubbed in SEA and a few other places regionally and that's their business plan.

Are you saying that they cannot be successful that way? It seems to me that they have a lot of offer their passengers, their partners, and their shareholders.

Are they invincible? Hardly. But unless we want 3 or 4 domestic airlines - period - then I guess we should be thankful for the likes of AS, G4, B6, NK, F9, etc.

Quoting raddek (Reply 51):
I find it laughable that AS is going to SLC and think they are going to accomplish anything there.

Why is it laughable to add a new city to their network? It's been a GLARING HOLE in their network for YEARS. That they have a lot of customers in their markets who might enjoy being able to fly AS there doesn't seem laughable at all.

And what is it that you think they are trying to accomplish there? I hope you aren't reading comments on A.net and taking it as AS' business strategy.

Quoting raddek (Reply 51):
Just a waste of planes.

They're an airline. That's what planes are for. To connect cities. If they don't make money, they'll pull them.

-Dave

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: RyanairGuru
Posted 2014-03-31 01:26:34 and read 2570 times.

Quoting rwy04lga (Reply 25):
AS has no say in the matter.

No matter what the AS CEO spouts, his statement is irrelevant
Quoting rwy04lga (Reply 25):
If DL wants AS, only the DOJ can stop it.

Do you remember "Keep Delta My Delta?"

There are many factors that can stop a hostile takeover. Indeed hostile takeovers are often unsuccessful. Among other thing up the CEO and BOD's sleeve is simply explaining how they can deliver greater shareholder value as a standalone company, and many investors will at least consider their argument. This means the $$$ on the table have to go up for the takeover attempt to be successful.

Quoting ER757 (Reply 27):
You don't come around here very often do you?

  

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: par13del
Posted 2014-03-31 03:32:51 and read 2461 times.

Quoting tortugamon (Reply 55):
I read your post three times and I have to admit to not understanding one bit of it.

You stated compete on the global stage, I took that to mean international travel not domestic, if my understanding of the post was incorrect my apologies.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: RDUDDJI
Posted 2014-04-01 04:49:29 and read 1917 times.

Quoting commavia (Reply 45):
USAirways was not the nation's second largest "LCC." That was a ticket symbol. In reality, USAirways' cost structure and behavior was far more like a network/legacy carrier than an "LCC," which of course is why it does not appear that any portion of the regulatory/antitrust review apparatus ever viewed it as such - that moniker was P.R., not economic reality.

Agreed on the "ticker" symbol, yes that was PR. However, US's fares were typically 10-15% less than the legacy competitors due to their cost structure. Perhaps LFC is a better descriptor.

Quoting commavia (Reply 45):

Me! And many other people. Indeed, it seems that the DOJ challenge to the AA/USAirways merger came as a very big surprise to most of the people involved, and most industry analysts.

Personally, I don't consider a.net armchair CEO's as analysts. Airline industry analysts absolutely expected it to be reviewed/challenged. Any analyst who didn't expect it, well, let's just say they have room for improvement.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: burnsie28
Posted 2014-04-01 05:06:51 and read 1884 times.

Steenland said that about Northwest... then look what happened.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: commavia
Posted 2014-04-01 05:17:52 and read 1873 times.

Quoting RDUDDJI (Reply 60):
However, US's fares were typically 10-15% less than the legacy competitors due to their cost structure.

USAirways was not a "low cost" or "low fare" airline, and the U.S. government obviously did not view it as such.

Quoting RDUDDJI (Reply 60):
Personally, I don't consider a.net armchair CEO's as analysts.

Nor do I, which is why I never said I nor any other A.net member was an "analyst."

Quoting RDUDDJI (Reply 60):
Airline industry analysts absolutely expected it to be reviewed/challenged.

You must have been reading different papers than I was two years ago. Most of the reportage I read was about industry analysts viewing the risk of legal challenge as relatively low, and expecting pretty easy regulatory approval, given the minimal overlap of the two networks, and given that the last three airline mergers attracted essentially zero scrutiny.

[Edited 2014-04-01 05:18:20]

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: BigGSFO
Posted 2014-04-01 07:02:39 and read 1778 times.

Is it possible to ever have a discussion about AS that doesn't involve the "DL is buying AS" debate? Answer: No.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: usdcaguy
Posted 2014-04-01 16:46:25 and read 1528 times.

Quoting BigGSFO (Reply 63):

Is it possible to ever have a discussion about AS that doesn't involve the "DL is buying AS" debate? Answer: No.

The fact that the topic is incessantly brought up is indicative of the pressure that has built in light of consolidation. Personally, I'd love to be able to think of AS as unthreatened by its giant partners and have a "DL-free" conversation, but I'm afraid the idea of AS flying around in a vacuum without direct competition is ancient history. Consolidation is never over. It just takes a break from time to time.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: seabosdca
Posted 2014-04-01 17:35:27 and read 1449 times.

Quoting commavia (Reply 62):
USAirways was not a "low cost" or "low fare" airline, and the U.S. government obviously did not view it as such.

The government doesn't always get this one right. Southwest is now a legacy airline in terms of fares, costs (higher than AS!), and increasingly network, but the government still thinks Southwest sprinkles magic LCC pixie dust anywhere it flies.

Quoting usdcaguy (Reply 64):
Consolidation is never over. It just takes a break from time to time.

Consolidation is likely over, at least in bulk, until such time as something disruptive happens in the industry and brings about a bunch of new players. You may see a merger or two among the smaller players, but I don't think the four remaining majors can realistically absorb any more largish airlines. The question is whether AS can stay financially healthy with DL gunning for it. I think it can.

Topic: RE: Alaska CEO: "Staying Independent Is Right Strategy"
Username: RDUDDJI
Posted 2014-04-02 06:39:17 and read 1206 times.

Quoting commavia (Reply 62):
USAirways was not a "low cost" or "low fare" airline, and the U.S. government obviously did not view it as such.

It depends on how you define it. If they have fares that are consistently 10-15% lower than the competition, in my opinion (and some real analysts), that makes them a low(er) fare carrier. I'm sure that won't be the case after the merger.

[Edited 2014-04-02 06:39:46]


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