Max Q
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Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 1:46 am

As crazy a thought as it sounds I think it's a possibility that one of the Legacies could one day attempt to merge / acquire SW.


I know the business models are totally different and all the other reasons but I still think it's possible.
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luv2fly
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 1:49 am

Yes AS, VX, F9, NK, SY and G4 are going to join forces together.      Wow!  
You can cut the irony with a knife
 
airliner371
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 1:52 am

Not gonna happen... lets move on.
 
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par13del
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 1:57 am

Well, the secondary airport markets that made WN what it is today are gettingfewer and fewer, so if the debacle that a potential AA/US merger could create does happen and more expansion is required, I could see WN purchase AA and finally move into DFW  
 
srbmod
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 2:01 am

Could WN be acquired at some point? Yes. By an airline? Probably not. Southwest's current market cap is $8.56 Billion, which is slightly lower than United Continental Holdings ($8.81 Billion) and significantly lower than Delta's ($12.43 Billion). To acquire WN would require a pretty hefty amount of money and the only people with that kind of cash are private equity firms.
 
iFlyLOTs
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 2:06 am

I've always thought that a merger of equals could work with WN and a legacy where the legacy would do only international flying and Southwest would do the domestic flying. Keep the separate names but use both to feed eachother. No idea if it would really work but I always thought that it might be feasible.
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AeroWesty
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 2:12 am

I heard from my contacts that it would be Air Tahiti Nui!   
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DolphinAir747
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 2:23 am

Quoting iFlyLOTs (Reply 5):
I've always thought that a merger of equals could work with WN and a legacy where the legacy would do only international flying and Southwest would do the domestic flying. Keep the separate names but use both to feed eachother. No idea if it would really work but I always thought that it might be feasible

While this would be an interesting idea based on the model now being adopted by LH, AF, BA, and other European legacies, there are probably still too many domestic markets that warrant full-service airlines with first class, and otherwise regional carriers basically serve the cheaper regional airline role that WN would serve in such a merger.
 
planespotting
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 2:58 am

Quoting iFlyLOTs (Reply 5):
I've always thought that a merger of equals could work with WN and a legacy where the legacy would do only international flying and Southwest would do the domestic flying. Keep the separate names but use both to feed eachother. No idea if it would really work but I always thought that it might be feasible.

Emirates will one day buy WN.

Totally not joking at all ...
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TWA772LR
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 3:36 am

Quoting planespotting (Reply 8):
Totally not joking at all ...

So it could become FlyDallas.  

I think the chances of SA)">WN being bought buy anyone is the same chance of Gazpromavia taking over SA)">UA, SA)">DL, SA)">AA, BA, SA)">NK, SA, QF, and EK; then renaming the airline TWA, and flying Cessna 172s to the moon.
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PHX787
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 4:04 am

Arent they finishing up right now acquiring a carrier that was once known as Valujet ?   

Quoting luv2fly (Reply 1):
Yes AS, VX, F9, NK, SY and G4 are going to join forces together. Wow!

I can see it now-
WN merging with NK and shutting down the PHX focus city in favor of DFW            
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BD338
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 4:23 am

There's no way any legacy would ever get approval to acquire WN. Assuming AA/US happens, that will be last big US market merger for a longtime. Combining WN into any of the remaining 3 legacies would give that entity such a dominance that it would be very anti-competitive.
 
Bobloblaw
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 4:37 am

Quoting Max Q (Thread starter):
As crazy a thought as it sounds I think it's a possibility that one of the Legacies could one day attempt to merge / acquire SW.

No

Quoting iFlyLOTs (Reply 5):
I've always thought that a merger of equals could work with WN and a legacy where the legacy would do only international flying and Southwest would do the domestic flying. Keep the separate names but use both to feed eachother. No idea if it would really work but I always thought that it might be feasible.

SCOPE and pilots unions wont go for that. Those flying the domestic airline wont stand by and lose the opportunity to
bid the international routes and lose seniroity

Quoting PHX787 (Reply 10):
WN merging with NK and shutting down the PHX focus city in favor of DFW

WN wont merge with anyone. Its called a BUYOUT if WN does it.
 
ckfred
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 5:15 am

Quoting srbmod (Reply 4):
To acquire WN would require a pretty hefty amount of money and the only people with that kind of cash are private equity firms.

Hedge funds and private equity firms tend to buy companies that are performing poorly, fix them, and resell them. WN has done well for years, so it's not the typical target.

Now, Warren Buffet, through Berkshire Hathaway, buys well-run companies for growth opportunies. But, Buffet has an aversion to airlines. He lost money investing in US Air. Plus, he has Net Jets. He would rather people stop flying commercial and buy a fractional ownership interest in a biz jet.
 
ouboy79
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 5:17 am

WN and AS make the only sense for any other large scale merger among the majors now. Though not saying it is really all that feasible, but that's really the only one that comes to mind that could work.

DOJ will kill anything else. Largest domestic US airline is not an easy pill to swallow...many seem to forget how large they are compared to everyone else in this market.
 
Max Q
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 6:26 am

Ok, so what about Southwest acquiring one of the big three legacies ?


Not as outrageous as it sounds.
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Someone83
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 7:29 am

Quoting srbmod (Reply 4):
Could WN be acquired at some point? Yes. By an airline? Probably not. Southwest's current market cap is $8.56 Billion, which is slightly lower than United Continental Holdings ($8.81 Billion) and significantly lower than Delta's ($12.43 Billion). To acquire WN would require a pretty hefty amount of money and the only people with that kind of cash are private equity firms.

Market cap is almost irrelevant here, as if any of these was to buy WN, the cash cost would be that to the investment bankers and lawyers, as the purchase itself would most likely be funded be issuing new shares. Just like when UA bought CO and DL bought NW.....yes I know that called in a merger between equals for those that believe in their spin doctors  

Although that said, I agree with you conclusion: WN will not be bought by any of the legacies (in today's status)
 
luv2fly
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 10:21 am

Ok, so what about Southwest acquiring one of the big three legacies ?

Why? What would they gain for there money.
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wnflyguy
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 11:02 am

Don't see that ever happening,But like AirTran how about WN buying AlaskaAir.
Ya it's a long shot but Killing AlaskaAir off would add great value to the WN network.
wnfg 
my post are my opinion only and not those of southwest airlines and or airtran airlines.
 
Okie
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 2:07 pm

Quoting Max Q (Reply 15):
Ok, so what about Southwest acquiring one of the big three legacies ?

WN will take advantage of the mistakes that are left behind by the 3 bigs and will not have to buy anything except more aircraft. Just let the 3 bigs collapse out of markets.
Look at the number of flights at STL now 90+ and AA/TW/US just a few flights between them all. Just a nice orderly transition for WN.


Okie
 
RmTrice
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 3:44 pm

In the current environment, I don't see an aquision of WN by a legacy (or vice versa) making any sense at all. I think the only way WN would get aquired is if there was a drastic change in leadership where the goal would be to turn WN into an aquisiton target over a gradual period of time (sort of like Northwest). With over 700 planes, some 4,000+ daily flights nation-wide, all run on a network that isn't exactly the same as a traditional hub-and-spoke, it'd be a pretty big project getting WN to "fit" with anyone else.

An interesting scenario that could work would be one I daydreamed about not too long ago. WN and a legacy (like Delta) combining the best of what they do into one mega carrier. WN would own the domestic market and DL would be primairly international. Perhaps the brands would be seperate but the company would be the same. What WN calls ICOs (intentional connection opportunities) can be used to feed Delta internatoinal flights without necessairly sacrificing the point-to-point element of their network. DL can keep their regional jet operations running wherever the WN network doesn't overlap with it. WN would transfer whatever international flights they have over to DL metal. There would be a seamless travel experience under one company, but different brands.

idk, it sounds crazy but I'm certianly not the first one to think of something like that. In 10 to 20 years or so, this type of agreement could be what generates the next round of industry consolidation. Who knows?
 
PlaneAdmirer
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 4:00 pm

Other than a private equity bid if the market underprices WN's cash flow - like the Dell bid. Otherwise, no way. Why buy/merge with a legacy and the complications and the contracts etc.? Wouldn't it be cheaper to find figure out where WN's frequent fliers most often go internationally and start a few flights with a shiny new 787 if they want to go that route? Another airline buying them??? Maybe if the barrier to foriegn ownership is lifted and some overseas carrier decides they want a large US presence. How could a combination of AA, UA, or DL with WN ever get through the DOJ? It couldn't.
 
wjcandee
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 4:30 pm

It would be Frontier/PeoplExpress merger all over again.

Southwest's employee group would, I believe, only function well in a certain kind of work environment. They are personality-tested to make them fit well into this environment. Put them in a more-typical airline environment, I think you would lose a lot of operational efficiency.
 
flyby519
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 6:43 pm

Quoting iFlyLOTs (Reply 5):
I've always thought that a merger of equals could work with WN and a legacy where the legacy would do only international flying and Southwest would do the domestic flying. Keep the separate names but use both to feed eachother. No idea if it would really work but I always thought that it might be feasible.

We are heading that direction with the Mainline carriers outsourcing flying to Regional operators. Eventually Mainline will be left with predominantly international and Regionals will own the domestic market.

Quoting bobloblaw (Reply 12):
SCOPE and pilots unions wont go for that. Those flying the domestic airline wont stand by and lose the opportunity to
bid the international routes and lose seniroity

But it is already happening. Scope seems to slip a little more each contract cycle.
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ouboy79
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 7:01 pm

Quoting wjcandee (Reply 23):
Southwest's employee group would, I believe, only function well in a certain kind of work environment. They are personality-tested to make them fit well into this environment. Put them in a more-typical airline environment, I think you would lose a lot of operational efficiency.

Bingo. The hiring screening is some what different than other companies I've been with when it comes to what they look for. Experience is always there, but attitude and people skills are weighed far more heavily than I've seen anywhere else. Many of my co-workers definitely wouldn't function well in other companies, in a similar capacity/job role, due to the environment and culture of those other companies.
 
raddek
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RE: Chances That Southwest Will Be Acquired?

Tue Feb 12, 2013 9:05 pm

Quoting JOshu (Reply 22):

Agreed  

For WN to acquire AS? It probably wouldn't ever happen. AS has plenty of cash in the bank and equity. It would be a very costly purchase for any airline to pick up AS.

The only other merger/acquisition I can see in the future other than AA/US would be NK picking up F9. Other than that, the domestic 800 lb. Gorilla WN will just be their own airline doing their own thing.
 
LimaNiner
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RE: Chances That Southwest Will Be Acquired?

Wed Feb 13, 2013 12:50 am

At a market cap of only $8.5bn, the State of California should buy WN instead of spending $70bn+ on High Speed Rail ("HSR") to connect San Francisco to LA.

California could save about $60bn buying WN instead of building HSR.

So CA could buy WN, and then buy half the tickets for the cost of interest payments on the loans (call it 3% on $70bn, or $2.1bn/year -- that is 50% of WN's revenue!), and hand them out to CA residents for free, and still save money over HSR!

Oh, and the WN-operated "HSR" would not just connect Sacramento to LA -- it would go all the way to the East Coast, and could add "stops" at any airport where there was demand.

And, yes, I realize this whole endeavour is an asinine idea -- but compared to HSR, it looks pretty good, no? ...which just goes to show how *truly* asinine the idea of HSR is.
 
The777Man
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RE: Chances That Southwest Will Be Acquired?

Wed Feb 13, 2013 3:24 am

Quoting luv2fly (Reply 17):
Ok, so what about Southwest acquiring one of the big three legacies ?

When UA was in chapter 11, there was apparently discussions going on for several weeks of WN taking over UA. Obviously didn't work out/happen.

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