Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
User avatar
enilria
Topic Author
Posts: 10256
Joined: Fri Feb 22, 2008 7:15 pm

Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 3:16 pm

Given that the stock price crash has impacted all airlines, why is Spirit doing this? Who are they concerned about? Indigo?


March 30, 2020
The adoption of the Rights Agreement is intended to enable all Spirit stockholders to realize the full potential value of their investment in the company and to protect the interests of the company and its stockholders by reducing the likelihood that any person or group gains control of Spirit through open market accumulation or other tactics (especially in current volatile markets) without paying an appropriate control premium...Under the Rights Agreement, the rights generally would become exercisable only if a person or group (including a group of persons who are acting in concert with each other) acquires beneficial ownership of 10% or more of Spirit common stock in a transaction not approved by the Spirit Board of Directors. Passive investors in Spirit, meaning such persons holding shares of the common stock of Spirit without a plan or an intent to change or influence the control of Spirit (including Schedule 13G filers), are exempt from the Rights Agreement. In the event the rights under the Rights Agreement become exercisable, each holder of a right (other than the acquiring person or group, whose rights will become void and will not be exercisable) will have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Agreement, a number of shares of Spirit common stock having a market value of twice such price. In addition, if Spirit is acquired in a merger or other business combination after an acquiring person acquires 10% or more of Spirit common stock, each holder of the right would thereafter have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Agreement, a number of shares of common stock of the acquiring person having a market value of twice such price. The acquiring person or group would not be entitled to exercise these rights.


http://ir.spirit.com/file/Index?KeyFile=403439411
 
CRJ5000
Posts: 146
Joined: Thu Jan 17, 2019 3:06 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 3:23 pm

I wonder what they know that we don't? Or if it's just a preemptive defensive move.
Doesn't the government grant forbid M&A as well?
 
Miamiairport
Posts: 668
Joined: Tue Apr 10, 2018 8:14 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 3:28 pm

Given the economic havoc that is and will be brought upon the economy air travel isn't going to rebound for years. Few will have the money to fly to Disney for vacation, even on $39 fares. The ULCC business model will either collapse or be scaled back in size. Airlines will cut capacity by untold numbers. The airlines will cut capacity to match demand and pump up fares. The days of the BE fare will be gone, or more appropriately the BE fare will be far more than the BE fare of today.
 
User avatar
enilria
Topic Author
Posts: 10256
Joined: Fri Feb 22, 2008 7:15 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 3:42 pm

Miamiairport wrote:
Given the economic havoc that is and will be brought upon the economy air travel isn't going to rebound for years. Few will have the money to fly to Disney for vacation, even on $39 fares. The ULCC business model will either collapse or be scaled back in size. Airlines will cut capacity by untold numbers. The airlines will cut capacity to match demand and pump up fares. The days of the BE fare will be gone, or more appropriately the BE fare will be far more than the BE fare of today.

I completely disagree. LCCs typically thrive during down periods. The reasons are:

1) Former legacy customers move down to LCCs replacing former LCC customers who can no longer afford to fly.
2) Legacy carriers shrink creating opportunities
3) In good times legacy carriers devote considerable financial resources to knee-capping LCCs with retaliatory fares, capacity, etc.; but in bad times they do not have the excess financial strength to do this.
CRJ5000 wrote:
I wonder what they know that we don't? Or if it's just a preemptive defensive move.
Doesn't the government grant forbid M&A as well?

They do know something. They must have gotten wind of a non-airline buying into them. An airline would need anti-trust approval before acquiring stock. Plus airlines have no money now.
 
User avatar
zkojq
Posts: 4323
Joined: Fri Sep 02, 2011 12:42 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 3:44 pm

Miamiairport wrote:
Given the economic havoc that is and will be brought upon the economy air travel isn't going to rebound for years. Few will have the money to fly to Disney for vacation, even on $39 fares. The ULCC business model will either collapse or be scaled back in size.


Why do you say that? One could argue that a recession will make it harder for travellers to justify the higher price of flying with the legacy carriers over ULCCs. Especially in an age where many/most legacies have cut back on service and charge for baggage etc. Ryanair certainly did well out of the GFC both in terms of profits and in terms of increased marketshare. Easyjet did quite well out of it too.
Last edited by zkojq on Mon Mar 30, 2020 3:51 pm, edited 2 times in total.
First to fly the 787-9
 
CRJ5000
Posts: 146
Joined: Thu Jan 17, 2019 3:06 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 3:45 pm

Miamiairport wrote:
Given the economic havoc that is and will be brought upon the economy air travel isn't going to rebound for years. Few will have the money to fly to Disney for vacation, even on $39 fares. The ULCC business model will either collapse or be scaled back in size. Airlines will cut capacity by untold numbers. The airlines will cut capacity to match demand and pump up fares. The days of the BE fare will be gone, or more appropriately the BE fare will be far more than the BE fare of today.


Haven’t the ULCC’s worldwide fared better in recessions and economic downturns in the past? I understand this is likely significantly greater of a recession, but do we really want to write ULCC model off?
 
klakzky123
Posts: 688
Joined: Mon Jul 04, 2016 4:05 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 3:48 pm

This is a concern for a lot of companies in the industry. Aviation and Travel related companies are dealing with artificially low share prices because of Covid-19 so they're all ripe targets for hostile takeovers. The larger legacies will be fine but smaller airlines and niche companies (like IT providers) are extremely vulnerable at the moment. Oil and Gas is facing a similar issue. The Carl Icahns of the world are ready to take advantage of the situation.
 
sonicruiser
Posts: 921
Joined: Sun Nov 04, 2018 4:18 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 3:52 pm

I bought a lot of Spirit stock in the last week and I'd imagine there has been a surge of stock buying in the market as others would be doing the same.
شما می توانید مردم را تحریم کنید ، اما نمی توانید سبک تحریم را اعمال کنید

You can sanction people, but you can't sanction style
 
MIflyer12
Posts: 8105
Joined: Mon Feb 18, 2013 11:58 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 4:02 pm

enilria wrote:
CRJ5000 wrote:
I wonder what they know that we don't? Or if it's just a preemptive defensive move.
Doesn't the government grant forbid M&A as well?

They do know something. They must have gotten wind of a non-airline buying into them. An airline would need anti-trust approval before acquiring stock. Plus airlines have no money now.


Lots of companies, huge to small, have poison-pill defenses. Some lawyers made a nice fee by suggesting Spirit strengthen its defenses.
 
DfwRevolution
Posts: 9305
Joined: Sat Jan 09, 2010 7:31 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 4:10 pm

This looks pretty boilerplate to me. I’m not sure I would read much further into it.
I have a three post per topic limit. You're welcome to have the last word.
 
FlyingElvii
Posts: 883
Joined: Wed Dec 27, 2017 10:53 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 4:36 pm

enilria wrote:
Miamiairport wrote:
Given the economic havoc that is and will be brought upon the economy air travel isn't going to rebound for years. Few will have the money to fly to Disney for vacation, even on $39 fares. The ULCC business model will either collapse or be scaled back in size. Airlines will cut capacity by untold numbers. The airlines will cut capacity to match demand and pump up fares. The days of the BE fare will be gone, or more appropriately the BE fare will be far more than the BE fare of today.

I completely disagree. LCCs typically thrive during down periods. The reasons are:

1) Former legacy customers move down to LCCs replacing former LCC customers who can no longer afford to fly.
2) Legacy carriers shrink creating opportunities
3) In good times legacy carriers devote considerable financial resources to knee-capping LCCs with retaliatory fares, capacity, etc.; but in bad times they do not have the excess financial strength to do this.
CRJ5000 wrote:
I wonder what they know that we don't? Or if it's just a preemptive defensive move.
Doesn't the government grant forbid M&A as well?

They do know something. They must have gotten wind of a non-airline buying into them. An airline would need anti-trust approval before acquiring stock. Plus airlines have no money now.

I would add two things to this:

One:
Due to sickness considerations, the highest-yielding customers are going to choose general aviation over crowded airplanes in crowded airports, for the foreseeable future. Expect a big spike in GA jet sales, especially the smaller ones, like Cirrus and Honda, to replace the aging Citation-like fleets. There is just no way around it, companies cannot afford the liability of sick senior staff, for as long as the threat is out there. That will eventually change, but not for a few years.

Two:
A huge number of jets are going to be permanently parked. After the Western Pacific/Midway/Morris episodes Of the 90’s, US carriers added provisions to their lease and purchase agreements that returned/sold aircraft could never again be operated by a US passenger carrier, and if they returned Via third party purchases, they would not be supported by the manufacturer, while in the US. This was to prevent another explosion of low fare carriers, like West PAC.

This time however, jets are being parked all over the world, and the pilot shortage just became a large surplus. A new entrant will now have the choice of any number of planes around the globe, not subject to this restriction. While the Big Five pilot unions fight tooth and nail to keep what they have gained in the last few years, new carriers will have a pool of hungry pilots willing to work for less, at least in the US.

Going to be interesting to see what happens in the next few years. From Chaos come Opportunity.
 
Aptivaboy
Posts: 928
Joined: Fri Jul 15, 2016 3:32 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 4:50 pm

I wonder what they know that we don't? Or if it's just a preemptive defensive move.


More than likely, that's it. With the current economic chaos, there are probably any number of holding or private equity companies that might look at acquiring other businesses. Perhaps Spirit has heard something definite, or perhaps Spirit is simply playing defense. Time will tell.
 
flyby519
Posts: 1570
Joined: Tue Jul 24, 2007 3:31 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 5:07 pm

Aptivaboy wrote:
I wonder what they know that we don't? Or if it's just a preemptive defensive move.


More than likely, that's it. With the current economic chaos, there are probably any number of holding or private equity companies that might look at acquiring other businesses. Perhaps Spirit has heard something definite, or perhaps Spirit is simply playing defense. Time will tell.


Private equity buying an airline is a nightmare scenario for everyone (except the PE firm). Let’s hope this doesn’t start happening.
 
Mainland
Posts: 277
Joined: Mon Jun 14, 2004 3:17 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 5:22 pm

I work in corporate governance, so I'll try to break this down easily.

Yes, a poison pill is there as a defensive measure to block an outright takeover, but it's also going to stop an investor (unless approved by Spirit) from accumulating over 10%, even without proposing a takeover. With a market cap at or just below $1 billion currently, the last thing the board probably wants to see is some rock the boat kind of activist pop up suddenly with a 3% or 4% ownership, or more, and start to agitate. Recall back in 2016 two shareholders with about 5% threatened a proxy fight at United, until they settled and their representatives got put on the board. (Would a pill at United prevented that from happening? Probably not...)

A fair amount of companies do have active poison pills, but they're far less popular than they were several years ago. It's true though, in the past few weeks a many have been adopted, and at bigger name companies, given the significant fall in share prices. I believe this is the first poison pill in the U.S aviation industry since Midwest threw one up when it was dealing with overtures from AirTran. Unlike at Midwest, however, I doubt there's an imminent threat of a takeover at Spirit.

It's proxy season, the time of annual shareholder meetings, and a very common time for activists to make their demands. Now why do I suspect there's no imminent threat? Most of the behind the scenes battles that were taking place before Covid have been called off or settled. It's a temporary truce. Nobody wants to fight for board seats in this environment when some companies are just focused on making sure they survive. So, with probably no imminent threat, Spirit is likely looking out a few months when this situation, hopefully, is mostly behind us. If investor sentiment starts to pick up, but aviation stocks remain depressed and Spirit is around the same share price as it is today, a $100 million-ish investment or less (whatever gets to 10%) starts to look like chump change for an activist fund. The pill will remain in place for one-year, so this buys them time to stiff arm any potential agitators.

However, most large investors (the names overseeing your 401Ks) and those in corporate governance frown upon a never-ending poison pill, or at least one that isn't approved by shareholders. It doesn't look like shareholders will asked to approve this poison pill at Spirit's annual meeting in a few weeks since it was adopted so close to when they normally hold their meeting. However, if the board wants to keep this in place next year there will be pressure for them to ask shareholders to extend the terms.
You don't need a passport to know what state you're in...
 
ptcflyer
Posts: 123
Joined: Fri Apr 13, 2001 12:03 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 5:28 pm

It will be very challenging times for the airlines industry to regain profitability. With so many relatively new planes spread across nationwide with varying business strategies... a whole new price vs capacity equilibrium will need to be established. And this battle will be fought across virtually every market. There will be very frequent price wars... irrational pricing if a carrier is just fishing for cashflow. Think of the late 70s and 80s ... and how difficult it was for carriers to adjust to deregulation. The Covid-19 restart could be equally as traumatic. 2 Options: Option 1: I would believe that there will need to be multiple rounds government bailouts with the government having to eventually pick winners and losers. Option 2: The industry restructures under bankruptcy codes. Shareholders get wiped out. Bond holders take steep losses. Contracts will be renegotiated, New business plans are drawn up by the carriers and the investment community picks the winners and losers based on the quality of their capabilities and plans moving forward. But I fear just getting back to business as usual is not likely. in both options, many planes and entire fleet types will disappear from the commercial passenger skies. Growth will be far more disciplined. Fares will eventually be significantly higher. Fasten your seatbelts.
 
argentinevol98
Posts: 176
Joined: Mon Jan 20, 2020 9:40 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 5:38 pm

I wonder if this might have a large long-term impact in US business travel patterns. It is really quite common in Europe for many employers to push lower-level (non-executive) employees onto Easyjet, Ryanair, Vueling, etc. for business travel within the continent. In the US, while Y is often the choice for lower-level employees, most still tend to travel on legacies. I wonder if that will change some and US businesses may adopt more "European" thinking on this front. Most business travelers pack light anyway so the current tight carry-on/checked bag allowances on ULCCs are barely an issue. It'd be a boon for Spirit, Frontier, etc.
"He sospechado alguna vez que la única cosa sin misterio es la felicidad, porque se justifica por sí sola"-Jorge Luis Borges
 
Miamiairport
Posts: 668
Joined: Tue Apr 10, 2018 8:14 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 5:43 pm

ptcflyer wrote:
It will be very challenging times for the airlines industry to regain profitability. With so many relatively new planes spread across nationwide with varying business strategies... a whole new price vs capacity equilibrium will need to be established. And this battle will be fought across virtually every market. There will be very frequent price wars... irrational pricing if a carrier is just fishing for cashflow. Think of the late 70s and 80s ... and how difficult it was for carriers to adjust to deregulation. The Covid-19 restart could be equally as traumatic. 2 Options: Option 1: I would believe that there will need to be multiple rounds government bailouts with the government having to eventually pick winners and losers. Option 2: The industry restructures under bankruptcy codes. Shareholders get wiped out. Bond holders take steep losses. Contracts will be renegotiated, New business plans are drawn up by the carriers and the investment community picks the winners and losers based on the quality of their capabilities and plans moving forward. But I fear just getting back to business as usual is not likely. in both options, many planes and entire fleet types will disappear from the commercial passenger skies. Growth will be far more disciplined. Fares will eventually be significantly higher. Fasten your seatbelts.


Totally agree. We are going to have an economic meltdown that will surpass the 1930s. We may not need a war to recover buts it’s going to be a slow go. Consumers aren’t going to have the income or credit to go to Disney. They won’t be flying. Business travelers will be as well as high end leisure and they won’t be flying Spirit or Allegiant.
 
WaywardMemphian
Posts: 1497
Joined: Sat Dec 13, 2014 9:05 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 5:47 pm

Miamiairport wrote:
Given the economic havoc that is and will be brought upon the economy air travel isn't going to rebound for years. Few will have the money to fly to Disney for vacation, even on $39 fares. The ULCC business model will either collapse or be scaled back in size. Airlines will cut capacity by untold numbers. The airlines will cut capacity to match demand and pump up fares. The days of the BE fare will be gone, or more appropriately the BE fare will be far more than the BE fare of today.



Thanks for the laugh.
 
User avatar
aemoreira1981
Posts: 3586
Joined: Mon Jan 09, 2017 12:17 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 5:50 pm

The other factor to consider is: one can argue that NK is undervalued, based on profits the past few years. The idea is that someone may want to acquire NK for its fleet, now that they're about half owned, half leased (a few years ago, they were all leased). Spirit is trying to protect itself in a way that it could propose taking over someone else, or picking up the carcasses of someone else, as the airline has been building up an asset sheet. NK is small, but even it has to know how AA is extremely vulnerable right now, and slots at LGA and DCA are worth their weight in gold for short-haul ops.
 
OB1504
Posts: 3966
Joined: Tue Jul 27, 2004 5:10 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 6:26 pm

Miamiairport wrote:
ptcflyer wrote:
It will be very challenging times for the airlines industry to regain profitability. With so many relatively new planes spread across nationwide with varying business strategies... a whole new price vs capacity equilibrium will need to be established. And this battle will be fought across virtually every market. There will be very frequent price wars... irrational pricing if a carrier is just fishing for cashflow. Think of the late 70s and 80s ... and how difficult it was for carriers to adjust to deregulation. The Covid-19 restart could be equally as traumatic. 2 Options: Option 1: I would believe that there will need to be multiple rounds government bailouts with the government having to eventually pick winners and losers. Option 2: The industry restructures under bankruptcy codes. Shareholders get wiped out. Bond holders take steep losses. Contracts will be renegotiated, New business plans are drawn up by the carriers and the investment community picks the winners and losers based on the quality of their capabilities and plans moving forward. But I fear just getting back to business as usual is not likely. in both options, many planes and entire fleet types will disappear from the commercial passenger skies. Growth will be far more disciplined. Fares will eventually be significantly higher. Fasten your seatbelts.


Totally agree. We are going to have an economic meltdown that will surpass the 1930s. We may not need a war to recover buts it’s going to be a slow go. Consumers aren’t going to have the income or credit to go to Disney. They won’t be flying. Business travelers will be as well as high end leisure and they won’t be flying Spirit or Allegiant.


Why do you think companies will continue paying the exorbitant fares of the legacies? I would expect companies to slash costs in their travel budgets and lower level employees being expected to take whatever the cheapest option is, including ULCCs.

Business travel also won’t recover as quickly since the pandemic is showing that a lot of work doesn’t have a pressing need to be done in person.
 
OB1504
Posts: 3966
Joined: Tue Jul 27, 2004 5:10 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 6:26 pm

Miamiairport wrote:
ptcflyer wrote:
It will be very challenging times for the airlines industry to regain profitability. With so many relatively new planes spread across nationwide with varying business strategies... a whole new price vs capacity equilibrium will need to be established. And this battle will be fought across virtually every market. There will be very frequent price wars... irrational pricing if a carrier is just fishing for cashflow. Think of the late 70s and 80s ... and how difficult it was for carriers to adjust to deregulation. The Covid-19 restart could be equally as traumatic. 2 Options: Option 1: I would believe that there will need to be multiple rounds government bailouts with the government having to eventually pick winners and losers. Option 2: The industry restructures under bankruptcy codes. Shareholders get wiped out. Bond holders take steep losses. Contracts will be renegotiated, New business plans are drawn up by the carriers and the investment community picks the winners and losers based on the quality of their capabilities and plans moving forward. But I fear just getting back to business as usual is not likely. in both options, many planes and entire fleet types will disappear from the commercial passenger skies. Growth will be far more disciplined. Fares will eventually be significantly higher. Fasten your seatbelts.


Totally agree. We are going to have an economic meltdown that will surpass the 1930s. We may not need a war to recover buts it’s going to be a slow go. Consumers aren’t going to have the income or credit to go to Disney. They won’t be flying. Business travelers will be as well as high end leisure and they won’t be flying Spirit or Allegiant.


Why do you think companies will continue paying the exorbitant fares of the legacies? I would expect companies to slash costs in their travel budgets and lower level employees being expected to take whatever the cheapest option is, including ULCCs.

Business travel also won’t recover as quickly since the pandemic is showing that a lot of work doesn’t have a pressing need to be done in person.
 
jetblueguy22
Posts: 3488
Joined: Thu Nov 29, 2007 12:26 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 7:00 pm

OB1504 wrote:
Miamiairport wrote:
ptcflyer wrote:
It will be very challenging times for the airlines industry to regain profitability. With so many relatively new planes spread across nationwide with varying business strategies... a whole new price vs capacity equilibrium will need to be established. And this battle will be fought across virtually every market. There will be very frequent price wars... irrational pricing if a carrier is just fishing for cashflow. Think of the late 70s and 80s ... and how difficult it was for carriers to adjust to deregulation. The Covid-19 restart could be equally as traumatic. 2 Options: Option 1: I would believe that there will need to be multiple rounds government bailouts with the government having to eventually pick winners and losers. Option 2: The industry restructures under bankruptcy codes. Shareholders get wiped out. Bond holders take steep losses. Contracts will be renegotiated, New business plans are drawn up by the carriers and the investment community picks the winners and losers based on the quality of their capabilities and plans moving forward. But I fear just getting back to business as usual is not likely. in both options, many planes and entire fleet types will disappear from the commercial passenger skies. Growth will be far more disciplined. Fares will eventually be significantly higher. Fasten your seatbelts.


Totally agree. We are going to have an economic meltdown that will surpass the 1930s. We may not need a war to recover buts it’s going to be a slow go. Consumers aren’t going to have the income or credit to go to Disney. They won’t be flying. Business travelers will be as well as high end leisure and they won’t be flying Spirit or Allegiant.


Why do you think companies will continue paying the exorbitant fares of the legacies? I would expect companies to slash costs in their travel budgets and lower level employees being expected to take whatever the cheapest option is, including ULCCs.

Business travel also won’t recover as quickly since the pandemic is showing that a lot of work doesn’t have a pressing need to be done in person.

Why do you think that every company doesn’t value their employees time?

My company’s booking agent tries to force us to buy fares within a certain policy, but I have never been rejected a higher out of policy fare that minimizes my time away from home. There reaches a certain point where buying the cheaper costs you more money on hotels, food, rental cars.

Even at a cheaper fare a 1x daily flight that leaves at say 7PM does nothing to save money considering you would probably have to spend an extra night on either the inbound or the outbound.

Until airlines like NK build up their 5X daily LGA-ATL type flights they’re useless to business travelers.
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
User avatar
lightsaber
Moderator
Posts: 20085
Joined: Wed Jan 19, 2005 10:55 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 7:06 pm

WSJ this morning noted companies (in general) are rushing to adopt poison pill strategies to avoid hostile takeovers. This was the paper version, so no link. Most highly leveraged companies are incredibly vulnerable to takeover right now.

Lightsaber
Winter is coming.
 
wnflyguy
Posts: 1962
Joined: Thu Feb 10, 2011 7:58 pm

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 7:15 pm

FlyingElvii wrote:
enilria wrote:
Miamiairport wrote:
Given the economic havoc that is and will be brought upon the economy air travel isn't going to rebound for years. Few will have the money to fly to Disney for vacation, even on $39 fares. The ULCC business model will either collapse or be scaled back in size. Airlines will cut capacity by untold numbers. The airlines will cut capacity to match demand and pump up fares. The days of the BE fare will be gone, or more appropriately the BE fare will be far more than the BE fare of today.

I completely disagree. LCCs typically thrive during down periods. The reasons are:

1) Former legacy customers move down to LCCs replacing former LCC customers who can no longer afford to fly.
2) Legacy carriers shrink creating opportunities
3) In good times legacy carriers devote considerable financial resources to knee-capping LCCs with retaliatory fares, capacity, etc.; but in bad times they do not have the excess financial strength to do this.
CRJ5000 wrote:
I wonder what they know that we don't? Or if it's just a preemptive defensive move.
Doesn't the government grant forbid M&A as well?

They do know something. They must have gotten wind of a non-airline buying into them. An airline would need anti-trust approval before acquiring stock. Plus airlines have no money now.

I would add two things to this:

One:
Due to sickness considerations, the highest-yielding customers are going to choose general aviation over crowded airplanes in crowded airports, for the foreseeable future. Expect a big spike in GA jet sales, especially the smaller ones, like Cirrus and Honda, to replace the aging Citation-like fleets. There is just no way around it, companies cannot afford the liability of sick senior staff, for as long as the threat is out there. That will eventually change, but not for a few years.

Two:
A huge number of jets are going to be permanently parked. After the Western Pacific/Midway/Morris episodes Of the 90’s, US carriers added provisions to their lease and purchase agreements that returned/sold aircraft could never again be operated by a US passenger carrier, and if they returned Via third party purchases, they would not be supported by the manufacturer, while in the US. This was to prevent another explosion of low fare carriers, like West PAC.

This time however, jets are being parked all over the world, and the pilot shortage just became a large surplus. A new entrant will now have the choice of any number of planes around the globe, not subject to this restriction. While the Big Five pilot unions fight tooth and nail to keep what they have gained in the last few years, new carriers will have a pool of hungry pilots willing to work for less, at least in the US.

Going to be interesting to see what happens in the next few years. From Chaos come Opportunity.


Morris?
June Morris was diagnosed with cancer so she went to Southwest. She offered Herb a deal to sale Morris air to WN so her employees would end up with stable jobs and health benefits.
WN flew the Morris Aircraft up until that retirement of the 737-300.

Flyguy
My Wings are clipped just another Retired Airline person. The Ultimate Armchair out of the loop airline industry geek. Aloha Mr Hand!
 
User avatar
Phosphorus
Posts: 1018
Joined: Tue May 16, 2017 11:38 am

Re: Spirit Attempts to Block Being Acquired (?)

Mon Mar 30, 2020 7:37 pm

lightsaber wrote:
WSJ this morning noted companies (in general) are rushing to adopt poison pill strategies to avoid hostile takeovers. This was the paper version, so no link. Most highly leveraged companies are incredibly vulnerable to takeover right now.

Lightsaber


Shame that "poison pills" are legal, really. Overextended, often nonviable businesses, in desperate need of reorganization, are protected from change of ownership.

Airlines are in unique situation, where any change of control and possible reorganization typically happen (largely) at the expense of the workforce...

But otherwise, the point stands. Zombie companies with impaired capital, propped up by unsustainably low interest rates, lingering on the back of government bailouts -- and from the government that already owes unimaginable (and probably both unprecedented and unpayable) amounts of money. How could this end well? Any rational economic theory, even as friendly to government intervention as Keyenesianism, never foresaw anything like this.
AN4 A40 L4T TU3 TU5 IL6 ILW I93 F50 F70 100 146 ARJ AT7 DH4 L10 CRJ ERJ E90 E95 DC-9 MD-8X YK4 YK2 SF3 S20 319 320 321 332 333 343 346 722 732 733 734 735 73G 738 739 744 74M 757 767 777
Ceterum autem censeo, Moscovia esse delendam

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos