WN has debt - their 12/31/03 balance sheet (it's on their website) shows just over $1.3 billion in long-term debt. A quick glance at their 2003 Annual Report shows references to both unsecured debt and Aircraft Secured Notes.
Don't get me wrong, when you have $5 billion in stockholder equity against $1.3 billion in long-term debt, that's excellent, and gives them a lot of maneouvering room other carriers just don't have. But it is incorrect to say they have "NO DEBT."
(One side point - I know it's popular to bash executive compensation, but if you look at other industries, most exectives who are responsible for companies the same size as the "legacy carriers" (measured by assets, employees, or sales) make more than their airline counterparts. Executive compensation is set by the market, just like any other pay scale.)
has weaknesses, too: their brand isn't as strong as you might think, in the same way as Wal-Mart's brand is "strong" in terms of name recognition, but doesn't connotate quality. (I've used the "WN=WalMart, B6
=Target" analogy many times.) The "737 Only" fleet helps in terms of keeping expense down, but limits their ability to enter some smaller markets that would offer good connection feed (say, FAT
) - there isn't enough demand to offer several 737s per day to get the efficiencies the WN
model calls for...they could use fewer 737 flights, or more flights with smaller A/C, but not both. Their airport choices in the Northeast limit code-sharing opportunities for destinations outside North America.
More tellingly, they've lacked imagination in the past, or have maybe been too conservative, which causes them to miss opportunities. They could have entered JFK
, for example. Also, there are some US-Canada routes they could have entered easily and would probably dominate by now (for example, YVR
.) Now, with WestJet, Jetsgo, and CanJet coming south, the moment's been lost. (The ATA deal and their more aggressive moves in Pennsylvania might be a sign of change here, though.)
And how many major airports do they really "own"? Sure, they "own" Midway and DAL
, but so what? Those are secondary airports in multiple-airport markets. They "own" Manchester and Islip. Okay, that's all well and good, but again these are secondary airports. There's good money to be made here, particularly at ISP
, but they have limitations as well.
does what they do very, very well, but they haven't proven they can do anything else effectively - they're something of a "johnny one-note", again much like Wal-Mart. (It's a hell of a good note, don't get me wrong! All those consecutive quarterly profits speak for themselves!) But they have yet to prove they can expand beyond their traditional business model. The ATA deal is a first step toward that, I'm curious to see how it'll work out...