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What Is WN Up To?  
User currently offlineBravoGolf From United States of America, joined Apr 2005, 539 posts, RR: 1
Posted (6 years 3 months 1 week 3 days 9 hours ago) and read 6727 times:

WN has taken out loans from various banks totaling $600 million. They have more cash on hand now than a year ago, 3.12 billion to last years 2.77 billion. They stated they wanted extra cash on hand for uncertain economic times. Thoughts on a possible alternate reasons?

53 replies: All unread, showing first 25:
 
User currently offlineContrails From United States of America, joined Oct 2000, 1833 posts, RR: 0
Reply 1, posted (6 years 3 months 1 week 3 days 9 hours ago) and read 6702 times:



Quoting BravoGolf (Thread starter):
WN has taken out loans from various banks totaling $600 million. They have more cash on hand now than a year ago, 3.12 billion to last years 2.77 billion. They stated they wanted extra cash on hand for uncertain economic times. Thoughts on a possible alternate reasons?

I'd like to know where this information is coming from. I'm not doubting it, just wondering.

Maybe they are hedging against "uncertain economic times". Maybe they're buying some more 737's. Or maybe they're getting ready to buy something, like maybe another airline. What kind of airline could they get for $3.12 billion?



Flying Colors Forever!
User currently offlineBravoGolf From United States of America, joined Apr 2005, 539 posts, RR: 1
Reply 2, posted (6 years 3 months 1 week 3 days 9 hours ago) and read 6691 times:



Quoting Contrails (Reply 1):
I'd like to know where this information is coming from. I'm not doubting it, just wondering.

Business Week for one. Google Southwest Airlines News. The information is very recent.


User currently offlineFuturecaptain From , joined Dec 1969, posts, RR:
Reply 3, posted (6 years 3 months 1 week 3 days 9 hours ago) and read 6626 times:



Quoting Contrails (Reply 1):
Or maybe they're getting ready to buy something, like maybe another airline. What kind of airline could they get for $3.12 billion?

That would go a long way to purchasing most any US airline they want.

Perhaps this is going into new fuel hedges for the next decade?


User currently offlineOPNLguy From , joined Dec 1969, posts, RR:
Reply 4, posted (6 years 3 months 1 week 3 days 9 hours ago) and read 6582 times:



Quoting Contrails (Reply 1):
I'd like to know where this information is coming from. I'm not doubting it, just wondering.

http://aviationblog.dallasnews.com/a...outhwest-battens-down-the-hat.html


User currently offlineVega From , joined Dec 1969, posts, RR:
Reply 5, posted (6 years 3 months 1 week 3 days 8 hours ago) and read 6409 times:



Quoting BravoGolf (Thread starter):
..................Thoughts on a possible alternate reasons?

If the DL/NW and/or US/UA mergers progress to the DOJ phase, it's quite probable there will be certain routes and associated airport gates which will be divested to gain approval and/or to consolidate the combined carriers for efficiency. I'd speculate WN may be projecting this (or already knows) and is caching $ to acquire certain resources. Regarding US/UA, WN already has presence at IAD and PHL and I'd guess they'd jump on most anything divested at those 2 locations. I'm not certain how much they could/would want to expand further at PHX, even if it is downsized, since they already have 32% of the passengers and have recently entered DEN.


User currently offlineJustapassenger From United States of America, joined Dec 2004, 95 posts, RR: 0
Reply 6, posted (6 years 3 months 1 week 3 days ago) and read 6173 times:

Wouldn’t it be wonderful if the new Delta had to give up some gates at ATL and MSP.

User currently offlineLexy From United States of America, joined Jun 2006, 2515 posts, RR: 8
Reply 7, posted (6 years 3 months 1 week 2 days 21 hours ago) and read 6115 times:



Quoting Justapassenger (Reply 6):
Wouldn’t it be wonderful if the new Delta had to give up some gates at ATL and MSP.

That would be the end of the world as we know it.



Nashville, Tennessee KBNA
User currently offlineOzarkD9S From United States of America, joined Oct 2001, 5048 posts, RR: 21
Reply 8, posted (6 years 3 months 1 week 2 days 21 hours ago) and read 6115 times:



Quoting Justapassenger (Reply 6):


Wouldn’t it be wonderful if the new Delta had to give up some gates at ATL and MSP.

If it's ATL FL would probably mortgage the ranch to get some more gates there. WN would probably be interested in MSP over ATL.

But at most we're talking 3-4 gates at either airport.

Might WN be eyeballing DCA if UA/US goes forward? 50 or so slot pairs would make a nice WN op at DCA, but everyone else is going to want a piece of that action if DOT/Justice wants UA/US to divest DCA assets. FL for sure....



Next Up: STL-LGA-RIC-ATL-STL
User currently offlineBNAtraveler From United States of America, joined Dec 2003, 410 posts, RR: 2
Reply 9, posted (6 years 3 months 1 week 2 days 18 hours ago) and read 5957 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Also, interestingly enough Gary Kelly recently announced that they had changed their mind and are now slowing 737-300 retirements from what they previously had announced.

User currently offlineCubsrule From United States of America, joined May 2004, 22847 posts, RR: 20
Reply 10, posted (6 years 3 months 1 week 2 days 16 hours ago) and read 5813 times:



Quoting Justapassenger (Reply 6):
Wouldn’t it be wonderful if the new Delta had to give up some gates at ATL and MSP.

Why would they have to? The merger barely affects the competitive environment at either place.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineBooDog From United States of America, joined Nov 2007, 257 posts, RR: 0
Reply 11, posted (6 years 3 months 1 week 2 days 16 hours ago) and read 5729 times:



Quoting BNAtraveler (Reply 9):
Also, interestingly enough Gary Kelly recently announced that they had changed their mind and are now slowing 737-300 retirements from what they previously had announced.

You got a link for this? I'm not disputing the validness of your statement... I just want to read what else he said.



B1B - best looking aircraft ever.
User currently offlineFFlyerWorld From United States of America, joined Apr 2008, 335 posts, RR: 0
Reply 12, posted (6 years 3 months 1 week 2 days 15 hours ago) and read 5694 times:



Quoting Cubsrule (Reply 10):


Quoting Justapassenger (Reply 6):
Wouldn’t it be wonderful if the new Delta had to give up some gates at ATL and MSP.

Why would they have to? The merger barely affects the competitive environment at either place.

Exactly - not going to happen!

Quoting OzarkD9S (Reply 8):
If it's ATL FL would probably mortgage the ranch to get some more gates there. WN would probably be interested in MSP over ATL.

What makes you think MSP is more attractive to WN than ATL? Are you aware that in the 80's WN tried desparately to build a major hub in ATL at Charlie Brown Airport just about 6 miles west of downtown? They were going to build a terminal with up to 26 gates there and Eastern and Delta fought it all the way and they gave up. WN would LOVE to get into ATL - but there are NO gates available. And should any open up down the way - you can bet Airtran and/or yes - Delta will gobble them up so quickly - your head will spin!


User currently offlineScottB From United States of America, joined Jul 2000, 6741 posts, RR: 32
Reply 13, posted (6 years 3 months 1 week 2 days 15 hours ago) and read 5599 times:



Quoting OzarkD9S (Reply 8):
Might WN be eyeballing DCA if UA/US goes forward? 50 or so slot pairs would make a nice WN op at DCA

That's exactly what I was thinking. I don't think United would be eager to give up their international gateway at IAD, and the government is likely to force them to divest either the IAD hub or the DCA focus city. I expect that WN would be extremely interested in purchasing the DCA slot portfolio and taking over several gates there.

Quoting BravoGolf (Thread starter):
They stated they wanted extra cash on hand for uncertain economic times.

Well, I will say that it is a good sign (for them) that they have banks which are willing to part with cash right now. They may be trying to protect themselves in the event that credit tightens further. Or...they may be preparing to make a purchase.


User currently offlineRL757PVD From United States of America, joined Dec 1999, 4654 posts, RR: 11
Reply 14, posted (6 years 3 months 1 week 2 days 14 hours ago) and read 5531 times:

Perhaps something in preparation for their long discussed 2009 INTL opportunities? Even if its a code share, there still alot of associated costs.


Experience is what you get when what you thought would work out didn't!
User currently offlineB6fll From , joined Dec 1969, posts, RR:
Reply 15, posted (6 years 3 months 1 week 2 days 13 hours ago) and read 5491 times:

I dont think Delta or Airtran could "gobble up" or stop Southwest in ATL, MSP or any other airport....

User currently offlineGsosbee From United States of America, joined Jan 2005, 825 posts, RR: 0
Reply 16, posted (6 years 3 months 1 week 2 days 13 hours ago) and read 5436 times:

A company generally does not borrow $600 million just to be safe. The carrying cost of the loan in itself would eat into cash reserves. Therefore four possible uses:

1. Future fuel hedge. They could see something in the future to warrant future fuel hedges. Since oil is now 20% overvalued and will come back to $80-$90 a barrel in the short term, WN's economic advisors could be seeing even higher future oil prices.

2. Purchase low cost oil futures. Believe it or not, there are oil traders who do not have the funds to complete their contracts. These are sold at discounts.

3. Acquire another airline/revenue producing asset.

4. Fend off an unwanted suitor. You never know when someone will offer for you just to put you into play.


User currently offlineContrails From United States of America, joined Oct 2000, 1833 posts, RR: 0
Reply 17, posted (6 years 3 months 1 week 2 days 13 hours ago) and read 5381 times:



Quoting Justapassenger (Reply 6):
Wouldn%u2019t it be wonderful if the new Delta had to give up some gates at ATL and MSP.

Wouldn't it be wonderful if they had to give up some gates at MEM? I'd love to see that.

Quoting Gsosbee (Reply 16):
A company generally does not borrow $600 million just to be safe. The carrying cost of the loan in itself would eat into cash reserves. Therefore four possible uses:

1. Future fuel hedge. They could see something in the future to warrant future fuel hedges. Since oil is now 20% overvalued and will come back to $80-$90 a barrel in the short term, WN's economic advisors could be seeing even higher future oil prices.

2. Purchase low cost oil futures. Believe it or not, there are oil traders who do not have the funds to complete their contracts. These are sold at discounts.

3. Acquire another airline/revenue producing asset.

4. Fend off an unwanted suitor. You never know when someone will offer for you just to put you into play.

An intriguing analysis. I hope you're right about the oil prices.



Flying Colors Forever!
User currently offlineOzarkD9S From United States of America, joined Oct 2001, 5048 posts, RR: 21
Reply 18, posted (6 years 3 months 1 week 2 days 12 hours ago) and read 5359 times:



Quoting FFlyerWorld (Reply 12):


What makes you think MSP is more attractive to WN than ATL? Are you aware that in the 80's WN tried desparately to build a major hub in ATL at Charlie Brown Airport just about 6 miles west of downtown? They were going to build a terminal with up to 26 gates there and Eastern and Delta fought it all the way and they gave up. WN would LOVE to get into ATL - but there are NO gates available. And should any open up down the way - you can bet Airtran and/or yes - Delta will gobble them up so quickly - your head will spin!

1. In the 80's WN was in their "alternate airport" mode. Only in the past few years have they charged full steam ahead into major airports where there's a dominant hub. STL being a notable exception, as it was the first legacy hub (TWA) to see significant WN ops. WN's just not that interested in secondary airports at this time.

2. FL already has significant ops in ATL, MSP would be easier pickings. There's no "blood in the water" at ATL, unlike DEN, PIT and PHL at the times WN entered. The folks in MSP are begging for some low fare relief, ATL not so much.

3. WN may indeed LOVE to get into ATL, but 3-4 gates at this point won't do them much good. I'm sure their weighing their options, other once-in-a-blue-moon opportunities might open up before ATL, unless FL shut down tomorrow.



Next Up: STL-LGA-RIC-ATL-STL
User currently offlineLexy From United States of America, joined Jun 2006, 2515 posts, RR: 8
Reply 19, posted (6 years 3 months 1 week 2 days 10 hours ago) and read 5236 times:



Quoting OzarkD9S (Reply 18):
WN may indeed LOVE to get into ATL, but 3-4 gates at this point won't do them much good. I'm sure their weighing their options, other once-in-a-blue-moon opportunities might open up before ATL, unless FL shut down tomorrow.

I really don't think ATL is on WN's radar at the moment or really in the future.



Nashville, Tennessee KBNA
User currently offlineTN757Flyer From , joined Dec 1969, posts, RR:
Reply 20, posted (6 years 3 months 1 week 2 days 10 hours ago) and read 5206 times:



Quoting FFlyerWorld (Reply 12):
Are you aware that in the 80's WN tried desparately to build a major hub in ATL at Charlie Brown Airport just about 6 miles west of downtown? They were going to build a terminal with up to 26 gates there and Eastern and Delta fought it all the way and they gave up

I would hardly call WN's attempt to fly into Brown Airport "trying desperately". Yes, they did float the idea around, and it was shot down by the city and county. It never even got to the stage of designing terminals or remotely close to that. It was, as described, an attempt at moving into an alternative airport. It simply went no where quickly and the idea died just as fast. They've managed quite successfully for 35+ years without flying into the Atlanta area, and my guess is they will continue to make a profit without the city on their route map.


User currently offlineJbernie From Australia, joined Jan 2007, 880 posts, RR: 0
Reply 21, posted (6 years 3 months 1 week 2 days 10 hours ago) and read 5200 times:

1) Southwest is looking at merger possibilities (no ideas but not completely out of the question)

2) Being in a good position financially they may have been able to get this financing at a very good rate, and even though they may not need the financing it was worthwhile to take for just in case.

Depending on the conditions of the financing they may not pay anything until they actually call on the credit, so it is there but not used and can potentially expire say in 18-24 months.

There was another posting about this last night and the OP had some comments from a newspaper in I think Dallas.


User currently offlineCubsrule From United States of America, joined May 2004, 22847 posts, RR: 20
Reply 22, posted (6 years 3 months 1 week 2 days 10 hours ago) and read 5136 times:



Quoting TN757Flyer (Reply 20):

I would hardly call WN's attempt to fly into Brown Airport "trying desperately". Yes, they did float the idea around, and it was shot down by the city and county. It never even got to the stage of designing terminals or remotely close to that. It was, as described, an attempt at moving into an alternative airport.

Boy, when you describe it like that, it starts to sounds like recent events in a certain city in the Pacific Northwest...

Quoting OzarkD9S (Reply 18):

3. WN may indeed LOVE to get into ATL, but 3-4 gates at this point won't do them much good. I'm sure their weighing their options, other once-in-a-blue-moon opportunities might open up before ATL, unless FL shut down tomorrow.

If the South terminal ever gets built, WN will have nearly unlimited growth potential at ATL. That will be a game changer (and, IMO, might be the end of FL).



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineTugger From United States of America, joined Apr 2006, 5491 posts, RR: 8
Reply 23, posted (6 years 3 months 1 week 2 days 9 hours ago) and read 4928 times:



Quoting Jbernie (Reply 21):
There was another posting about this last night and the OP had some comments from a newspaper in I think Dallas.

That was me, didn't see this thread on the topic so mine was deleted by the mods. Here's what I posted:

Hmmm....
Southwest decides to "bolster its cash position" and has stopped a $500 million stock repurchase program. What's going on at WN? Is it just readying itself for some rough weather ahead or does it have other things in mind that call for cash in hand?

http://www.chron.com/disp/story.mpl/ap/business/5773848.html

Quote:
Southwest Airlines Co. said Monday that it borrowed $600 million from Citibank and seven European banks to bolster its cash position because of uncertainty about the economy. .... The loans were secured by the first-lien mortgages on 21 of Southwest's Boeing 737-700 aircraft.

I liked this bit from the Dallas News:
http://aviationblog.dallasnews.com/a...outhwest-battens-down-the-hat.html

Quote:
Southwest already had $3.12 billion in cash and short-term investments as of March 31 and probably the best liquidity of any big U.S. carrier. So perhaps we should worry when Noah begins building a big boat and starts collecting animals.

Tugg



I don’t know that I am unafraid to be myself, but it is hard to be somebody else. -W. Shatner
User currently offlinePITops From United States of America, joined May 2007, 1442 posts, RR: 4
Reply 24, posted (6 years 3 months 1 week 2 days 7 hours ago) and read 4781 times:

From an email I got...

Our latest financial deal has created quite a few media headlines, and we wanted to clear up some confusion about the secured loan since several questions have been raised. The debt deal Southwest completed this week allowed us to take advantage of attractive financing terms and add $600 million to our cash position. Each year, Southwest borrows some amount of cash to fund our capital needs (such as to purchase aircraft). This deal did NOT affect Southwest's revolving line of credit of $600 million, contrary to some incorrect media reports. Our revolving line of credit is still undrawn and fully available to Southwest Airlines. This was a prudent financial transaction given the uncertainty in the economy, credit markets, and soaring energy prices.



Ground Ops, Southwest Airlines, CMH
25 Joeljack : Is this a play on words with acquiring Frontier? "collecting animals" hmmm...very interesting even though that would never happen.
26 Post contains links FXramper : http://www.airportbusiness.com/onlin...article.jsp?siteSection=1&id=19688 In the loan papers, the Dallas-based carrier said the money was to be used "
27 B6fll : There is no reason for Southwest to buy F9 or aquire them..Frontier is going to be out of buisness soon so WN can easily wait for there assests to bec
28 DeltaL1011man : B6 and F9 are under 2 bill If they get up ANY gates in Atlanta it will be the 3 NW gates on D and FL will take them as soon as the Northwest sign com
29 Cubsrule : So bankrupt carriers go out of business? Apparently, CO, DL, NW, US, and UA all missed the message...
30 Barney Captain : I see your point however, when those carriers entered bk, there was no shortage of capital to bail them out. In this increasing recession-like enviro
31 OzarkD9S : At this point, every carrier is looking at the IAD/DCA situation. Your scenario is just as plausible as any. The divesting of DCA slots may get real
32 Cubsrule : If that's true, why hasn't F9 liquidated straightaway?
33 B6fll : Everyone is so quick to defend F9???
34 MSYPI7185 : It will be interesting to see why they borrowed this money, however IMO it is not to buy fuel hedges. This does not make sense to me. It would be simi
35 Rsbj : That attitude is one of the many reasons why I left Delta years ago. Don't think the politicos in ATL won't listen to a proposal by WN to build up a
36 Cubsrule : I'm not defending them. You're making the (absurd) assumption that the fact they're in b/k means that they'll be going away. If anything, it will mak
37 EA CO AS : According to what I'm hearing, a Chapter 7 filing is inevitable for them. Let's not forget that WN also just added several new markets to/from DEN, o
38 MaverickM11 : How do FL's and WN's CASM compare these days?
39 ScottB : Because F9 filed for bankruptcy before their cash position was critical. They have enough cash right now to run the operation normally. Some companie
40 TN757Flyer : I assume you have a legitimate source to back this up? Or is it just another a.net rumor du jour? Why file Ch. 11 knowing 7 is inevitable? It would s
41 MaverickM11 : Fortunately, or unfortunately, depending on how you look at it, they've never really had much of a CASM problem. Their unit costs are good. Their uni
42 Cubsrule : For the 4 quarters ending 3Q07, WN had a CASM of 8.95 cents. FL's was 9.40. In the same period, WN had a RASM of 9.80 cents, while FL's was 9.96. I s
43 ScottB : It's funny that you say that because I was thinking the same thing today. The increase in credit card holdbacks which First Data had planned to impos
44 DeltaL1011man : I don't think it should be like that but fact is it is........Just like the UK is with BA.
45 Cubsrule : If WN were looking to purchase assets, my guess would be a FL or a part thereof... something like the BWI operation and some 73Gs. If FL's cash posit
46 Cjpark : Maybe WN is putting together the cash they pledged to use to rebuild Love Field. The Airport floated some ideas recently on the post Wright airfield a
47 DaCubbyBearBar : I would love to be a fly on the wall in DAL. There is no way, IMHO, that WN takes out a $600 M loan just to help their balance sheet and give it more
48 EA CO AS : Yes I do, thanks for asking. Regrettably I'm not in a position to share this source publicly.
49 Cubsrule : The problem is that you're asking us to assume that F9 isn't behaving rationally... if liquidation is inevitable, why continue to operate?
50 B752OS : Just for the sake of saying this, numbers 1 and 2 are the same thing, Purchasing a futures contract is a hedge. I am just curious how you are figurin
51 TN757Flyer : I have to agree with Cubsrule. The simple and easiest thing for Frontier to do would have been to close their doors rather than keep flying and bleed
52 Cloudy : Thats like saying - If I probably will die anyway, why not simply put a gun to my head and shoot myself? Liquidation in bankruptcy nearly always resu
53 Cubsrule : Fair enough. But if, as he seems to assume, liquidation has been inevitable from the beginning, why bother with Chapter 11? What advantage is there i
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