lowecur
Topic Author
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 3:27 pm

He says it's going to happen: Southwest Airlines CEO Gary Kelly expects 'an interesting 2008' for carriers. "At some point, I think we'll probably acquire somebody," Mr. Kelly said in a recent discussion with Dallas Morning News business editors and reporters. "There's bound to be a scenario that we would say, 'That scenario out of these 10, yep, that one would work for us.' We'd want to be prepared for that opportunity that presents itself."



http://www.dallasnews.com/sharedcont...s.ART0.State.Edition1.2a481bf.html
 
RL757PVD
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 3:43 pm

This could get interesting... im sure the FL/WN rumor gets even stronger now....
Experience is what you get when what you thought would work out didn't!
 
AirframeAS
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Thu Dec 20, 2007 3:58 pm

Could it be ATA?? That is my guess. I know I could very well be incorrect on that assumption.
A Safe Flight Begins With Quality Maintenance On The Ground.
 
pilotboi
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Thu Dec 20, 2007 4:00 pm

Funny...the quote says "we'll probably make an acquistion", but the title of this thread says "we will make an acquisition".
 
OPNLguy
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Thu Dec 20, 2007 4:02 pm

Sorry, but your subject header doesn't synch with the text that you quoted:

WN(Southwest) CEO - We Will Make Acquisiton

That's a definitive statement, i.e. SWA will 100% assuredly acquire somebody.

He says it's going to happen: Southwest Airlines CEO Gary Kelly expects 'an interesting 2008' for carriers. "At some point, I think we'll probably acquire somebody," Mr. Kelly said in a recent discussion with Dallas Morning News business editors and reporters. "There's bound to be a scenario that we would say, 'That scenario out of these 10, yep, that one would work for us.' We'd want to be prepared for that opportunity that presents itself."


No, he doesn't say "it's going to happen"--he said that he thought SWA would PROBABLY (my emphasis) acquire somebody, and even at "probably", that's still not the 100% sure thing that your subject header reflects. If an opportunity doesn't present itself, nothing is going to happen.

I know people like to speculate, and more power to those that want to indulge in that, but info needs to be interpreted carefully.
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
RL757PVD
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 4:09 pm

I think its essentially... "If someone else buys an airline, we will too". nothing really new, but just confirming whats been speculated.

Im sure Delta would be thrilled at the thought of having WN as their competitor at ATL rather than FL! Though i think the overall flight volume would go down. Places like ICT and MLI and CAK might have some ATL flights switched to other WN strongholds like STL, MDW and BWI, with a few cities like PHF and maybe BMI dropped entirely. They could also open up new routes such as PVD-ATL 3x etc.
Experience is what you get when what you thought would work out didn't!
 
miaami
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Thu Dec 20, 2007 4:35 pm

I think an AA/WN combination would work. Both HDQs in Dallas, common fleet. AA could concentrate on Intl routes and WN on Domestic.
 
JetBlueGuy2006
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Thu Dec 20, 2007 4:39 pm

I wouldn't be surprised if it was the WN/ATA. They already are partners, and it would allow WN to start flying to longer haul destinations such as Hawaii with the 757.
Home Airport: Capital Region International Airport (KLAN)
 
OPNLguy
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 4:48 pm

Here's the nterview from which the OP's quotes came from. Note the statement before the one that was quoted...

http://aviation.beloblog.com/archive.../12/more_from_gary_kelly.html#more
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
joeljack
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 5:07 pm

My guess would be WestJet.
 
SPREE34
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Thu Dec 20, 2007 5:27 pm



Quoting AirframeAS (Reply 2):
Could it be ATA??

Already a stock holder and code share. buying the whole of ATA wouldn't give them anything they can already take advantage of now.

Quoting RL757PVD (Reply 5):
"If someone else buys an airline, we will too"

No. If an opportunity presents itself. What you said is what UA,NW,AA,DL, etc will do, and possibly with messy consequences. The Southwest folks have a clearer, and long term view of things.

Quoting JetBlueGuy2006 (Reply 7):
I wouldn't be surprised if it was the WN/ATA. They already are partners, and it would allow WN to start flying to longer haul destinations such as Hawaii with the 757.

See my (above) reply to AirframeAS. Southwest already flies longer haul and Hawaii via code share with ATA.
What would Southwest gain by buying ATA?
I don't understand everything I don't know about this.
 
steeler83
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 5:33 pm



Quoting JetBlueGuy2006 (Reply 7):
I wouldn't be surprised if it was the WN/ATA. They already are partners, and it would allow WN to start flying to longer haul destinations such as Hawaii with the 757.



Quoting AirframeAS (Reply 2):
Could it be ATA?? That is my guess. I know I could very well be incorrect on that assumption.

This scenario seems to be the most logical for reasons already discussed. In addition to Hawaii, they could fly to Canada, such as MCO-Vancouver or LAX-YYZ, but also fly routes such as SEA-AUA or LAX-SJU.

An AA/WN merger? I have my doubts...
Do not bring stranger girt into your room. The stranger girt is dangerous, it will hurt your life.
 
contrails
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 5:34 pm



Quoting Miaami (Reply 6):
I think an AA/WN combination would work. Both HDQs in Dallas, common fleet. AA could concentrate on Intl routes and WN on Domestic.

I was thinking the same thing (FYI: AA's headquarters are in Ft. Worth). Would the Justice Department approve it?

I think DL or NW would be more viable, but wouldn't a WN-AA merger be interesting???
Flying Colors Forever!
 
Iloveboeing
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Thu Dec 20, 2007 5:47 pm



Quoting Contrails (Reply 12):
but wouldn't a WN-AA merger be interesting???

Yes, that would be interesting. They would have to make some major fleet changes, though, such as get rid of the M80s and A300s. I think the AA employees would probably prefer the WN management to be in charge. 777s (and 787s which I bet they'll order) in WN colors...........that would be cool!
 
steeler83
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Thu Dec 20, 2007 6:05 pm



Quoting Iloveboeing (Reply 13):
Yes, that would be interesting. They would have to make some major fleet changes, though, such as get rid of the M80s and A300s. I think the AA employees would probably prefer the WN management to be in charge. 777s (and 787s which I bet they'll order) in WN colors...........that would be cool!

That would be quite interesting. This airline would become the largest operator of 737s if they did that, a simple MD80 replacement right there pretty much, although I think the MD80s have slightly more capacity than WN's 737s do, they seat about the same.

Other than that, they'd become not only the largest LCC, but the largest airline in the world (AA already holds that feet I think). They'd have a large Europe network, whopper bases in Chicago and Dallas, a BOS and JFK presence, PHL focus city, big presence at both FLL and MIA. They'd likely become the biggest airline east of the Mississippi River... as well as in the west...
Do not bring stranger girt into your room. The stranger girt is dangerous, it will hurt your life.
 
mcamargo
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 6:23 pm



Quoting SPREE34 (Reply 10):
Southwest already flies longer haul and Hawaii via code share with ATA.

But the code-share is only for select markets, isn't it?

I know it wouldn't allow me to book a flight from HRL-Hawaii a year or so back when I was browsing around from fares.
I live for the day mainline returns to BRO...
 
futurecaptain
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 6:28 pm

I'd also speculate a Southwest - Air Tran merger is being looked at more closely.

But, just to speculate.
Could WN perhaps want a regional carrier? Express Jet anyone? American Eagle?
There's a short list of Boeing operators in the US, I doubt one of the big 6 would be bought out by WN. Could WN look at an Airbus operator? Sell off the assets, make some quick cash, and simply remove some competition?
AirSO. ASpaceO. ASOnline. ASO.com ASO. ASO. ASO. ASO. ASO.
 
VictorKilo
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Thu Dec 20, 2007 6:30 pm

Here's the quote in context:

Quote:
Q. what do you say to analyst or hedge manager who is high on the consolidation idea, says, Gary, why don’t you eliminate your closest competitor by acquiring AirTran?

A. We can’t let investors guide the company. That’s not to say that investors aren’t smart and don’t have good ideas, because they do. They just have different motives. We’ve got to stay true to who we are as a company and build for the long term. I have plenty of examples that I could relate to you where we had investors come in and say, ‘you need to do a $3 billion, and this is in May, not last month, by the way, do a $3 billion, Dutch auction share repurchase right now and get this stock moving.’ And of course, we’d be sitting here in the soup with every other airline that has lousy balance sheeting. Just things like that, you’ve just got to say that’s not a good idea for Southwest Airlines or the airline industry. They wouldn’t even think it’s a good idea now, but they did in May.

You have to in the end follow your own compass, recognize that some interests align with ours and some don’t.

Now, to answer your question specifically, it first of all has to fall within that filter. For our long-term interests, we do want to grow. We serve customers better if we give them more destinations. We don’t serve places like, just to try to use a specific example since you picked AirTran, they serve Atlanta we don’t. We have customers every day who say, ‘I wish you flew to Atlanta because if you did, I’d fly Southwest Airlines.’ That is enhancing the brand by adding that to the route map. It just has to be done in a way that we can live up to our four or five objectives.

At some point, I think we’ll probably acquire somebody. That’s just a reflection of my view that the industry is weak and that there’ll be players up for sale, probably in a fire-sale mode, and we’ll want to at least be thoughtful about that.”

Q. Like ATA

A. Yeah, as you’re very well aware. We’ll still have all the considerations you’re very well aware of – the fleet, the labor contracts, the seniority issues, the cost implications of it, the cultural aspects of trying to bring two work groups together and on and on and on. We would be concerned about and always have been.

Having said all that, I think there’s bound to a scenario that we would say, ‘that scenario out of these 10, yep, that one would work for us.’ We’d want to be prepared for that opportunity that presents itself.


Taken out of context, it could seem like WN is actively looking to acquire a competitor right now. In context, it seems like WN isn't actively looking to acquire another company, but wants to be ready to pounce if the right assets became available at the right price, and thinks that there is a good chance that such assets could become available sometime in the future. Totally different from the "we wanna make a deal" posturing of UA.

As far as targets go, I doubt FL is an option, not because of ATL, but because of the significant operations they both have at BWI. I'm more likely to believe that WN would do a smaller deal with lower integration risk to add an airport they either can't currently access or can't expand at without making a deal. SY comes to mind as the most likely to fit the bill, if the price was right.
 
sxf24
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 6:45 pm



Quoting SPREE34 (Reply 10):
Already a stock holder and code share. buying the whole of ATA wouldn't give them anything they can already take advantage of now.

WN no longer holds any interest in ATA. Since ATA is no longer a public company and has little value to WN, I don't see it as a logical choice. FL is a most higher possibility. It would give WN a greater presence on the East Coast and a excellent replacement for the 735s.
 
DfwRevolution
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Thu Dec 20, 2007 6:58 pm



Quoting Miaami (Reply 6):
I think an AA/WN combination would work. Both HDQs in Dallas, common fleet. AA could concentrate on Intl routes and WN on Domestic.

Are we talking about the same American Airlines and Southwest Airlines that have basically been mortal enemies since Herb got his hands on three 737-200? I think we have an equal chance of seeing El Al and IranAir merging.

Quoting VictorKilo (Reply 17):
I'm more likely to believe that WN would do a smaller deal with lower integration risk to add an airport they either can't currently access or can't expand at without making a deal. SY comes to mind as the most likely to fit the bill, if the price was right.

I think you are spot on.  checkmark 

While the seasonal flights offered by SY might not mesh with WN, I can't think of any other acquisition partners that would complement WN more for the effort involved.
I have a three post per topic limit. You're welcome to have the last word.
 
N1120A
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Thu Dec 20, 2007 7:04 pm

I like both the FL and SY ideas, though has anyone thought about an acquisition of Alaska? Common fleet once the MD80s are gone, significant presence in a high yield market (Alaska) and a brute force way of getting the people up in Seattle to talk to WN. It would also further strengthen Southwest's already formidable west coast presence.

Quoting Miaami (Reply 6):
I think an AA/WN combination would work.

That would never happen. It couldn't even get anti-trust approval.

Quoting JetBlueGuy2006 (Reply 7):
and it would allow WN to start flying to longer haul destinations such as Hawaii with the 757.

As it is, WN's 73Ws can easily fly from the west coast to Hawai'i

Quoting Sxf24 (Reply 18):
Since ATA is no longer a public company and has little value to WN, I don't see it as a logical choice.

It has value for the fleet and Midway gates

Quoting DfwRevolution (Reply 19):

While the seasonal flights offered by SY might not mesh with WN, I can't think of any other acquisition partners that would complement WN more for the effort involved.

I like the Sun Country idea as well. It would allow them to enter MSP without the likely road blocks being put up by the NW friendlies who run the place. I think the seasonals would either be dropped or kept year round if they are strong enough performers.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
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STT757
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Thu Dec 20, 2007 7:05 pm

I could see WN taking over US Airways:

WN takes over most Domestic ops, a spin off of US operates the International flights and some full service Domestic flights.

WN takes over all of US Airways LGA and DCA operations.

WN takes over PHL and PHX domestic operations.

Charlotte becomes a new WN "Hub", transformed to a WN style hub ala PHX, PHL, BWI, MDW etc..
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
isitsafenow
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Thu Dec 20, 2007 7:05 pm

Me thinks its Alaska.........
safe
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Flighty
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:11 pm

Very interesting that Gary is annoyed at shareholders. Personally, I am amazed WN shareholders are not more activist than they are. WN has been screwing its shareholders for years. (5 years). Now he says the company wants to chart its own path outside of typical shareholder desires?

Long term planning is good, but it's always wise to put in the same sentence, that you're doing it for long term shareholder well being. Otherwise, shareholders should kick the CEO out. WN must have one amazing sweetheart board of directors. The way WN burns its hedged jet fuel, rather than selling it, is Exhibit A.

Instad of the shareholders booking hedge profits, the money gets rolled into the airline, new 737s, etc, as if WN is afraid to book gains. Instead, it wants to prolong huge cash balances on the airline side... to pay pilots and executives for the next decade. Shareholders be damned.
 
justplanenutz
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:19 pm

AQ may be having a firesale soon. Buy them, order up some 738 or 739ERs (sorry ATA, we're gonna fly our own metal to Hawaii) and WN will soon own the islands the way they do California. FYI--Hawaii has 4 (IIRC) of the top 35 US domestic city pairs .
 
N1120A
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:21 pm



Quoting STT757 (Reply 21):
I could see WN taking over US Airways

I can't. An extremely mixed fleet, lots of debt and a labor force that is still not united. Forget about it.

Quoting Flighty (Reply 23):
The way WN burns its hedged jet fuel, rather than selling it, is Exhibit A.

They do nothing of the sort. Their oil speculation is separate from their fuel acquisition.

Quoting Flighty (Reply 23):
WN has been screwing its shareholders for years. (5 years).

I don't see how. WN actually pays a dividend, which is pretty amazing for an airline.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
sxf24
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Thu Dec 20, 2007 7:23 pm



Quoting N1120A (Reply 20):
It has value for the fleet and Midway gates

A handful of 738s, 757s and DC-10s? I don't think so. It would be much cheaper to lease or buy a few new 73Gs.

The MDW gates do have some value, but they are relatively few left and it would be difficult to justify the cost of acquiring what amounts to a military charter operation.
 
SXDFC
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:24 pm

I'd love to see WN in Hawaii, plus I am sure WN pilots are still more then qualified to fly the -200s.
 
PlanesNTrains
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Thu Dec 20, 2007 7:26 pm



Quoting Isitsafenow (Reply 22):
Me thinks its Alaska.........

I didn't think there was an "it's" yet??

I do like the AQ and SY scenario's though, particularly the latter. FL has always been interesting, but would be a big bite for them. AS would also be a big bite, and in the case of FL and AS, you'd basically be alienating a large portion for your FF's by killing the front cabin. Also, AS's operations in Alaska really don't fit the mold for WN - perhaps a "MarkAir" type of spinoff?

Anyhow, I agree. They appear to be saying "it could happen" much more than "it will happen". Afterall, didn't we all expect at least one, possibly two legacies to be dead and buried by now? We all thought WN was heading to Charlotte and US was heading to the grave. It could happen, but I don't think anyone can accurately predict what is going to happen.

-Dave
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
isitsafenow
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:32 pm



Quoting PlanesNTrains (Reply 28):
but I don't think anyone can accurately predict what is going to happen.

Agreed......Im just haven' some fun here......although I do like the post that mentioned Aloha. That's do-able with all
of AQ problems turning a dollar...good company with nice folks but they just can't seem to make a buck..
safe  champagne 
If two people agree on EVERYTHING, then one isn't necessary.
 
N1120A
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:32 pm



Quoting PlanesNTrains (Reply 28):
Also, AS's operations in Alaska really don't fit the mold for WN

Some may not exactly, but I think there are mitigating factors. One, WN has successfully flown less than daily routes before. Two, some of AS operations in Alaska are multiple daily and all are high yield (FAI-ANC, JNU-SEA, ANC-SEA, FAI-SEA, JNU-ANC all come to mind). Finally, the high yields and need for flexibility in ticketing in the market fits WN's model perfectly.

Quoting PlanesNTrains (Reply 28):
FL has always been interesting, but would be a big bite for them.

Given WN's value, I don't think it would be all that big a bit. Compare it to when a smaller WN bought MorrisAir

Quoting PlanesNTrains (Reply 28):
you'd basically be alienating a large portion for your FF's by killing the front cabin.

I don't know if that is true. WN does offer a superior main cabin product as far as comfort goes. Further, their fare structure is far better than either FL or AS.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
OPNLguy
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:37 pm

Quoting VictorKilo (Reply 17):
Taken out of context, it could seem like WN is actively looking to acquire a competitor right now. In context, it seems like WN isn't actively looking to acquire another company, but wants to be ready to pounce if the right assets became available at the right price, and thinks that there is a good chance that such assets could become available sometime in the future.

"Ding!"  

Won't stop the thread from going 100+ with every prospective combination under the sun, but what the hell...  

[Edited 2007-12-20 11:49:30]
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
Boeing7E7
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:38 pm

AirTran or Alaska. Everyone else is too intrenched and has too many headaches.
 
masseybrown
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Thu Dec 20, 2007 7:40 pm



Quoting N1120A (Reply 25):
WN has been screwing its shareholders for years. (5 years).

I don't see how.

Look at their stock graph for the last 5 years. Jan '03 is was about $14; today $12 and change.
 
PlanesNTrains
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Thu Dec 20, 2007 7:46 pm



Quoting Isitsafenow (Reply 29):
Agreed......Im just haven' some fun here..

Well, in hindsight, it's obvious no one KNOWS what's going to happen, so I didn't really need to add that  Smile.

Quoting N1120A (Reply 30):
Given WN's value, I don't think it would be all that big a bit. Compare it to when a smaller WN bought MorrisAir

Well, I was thinking more operationally - different fleets, different cabins - and I certainly agree that they could do it if they wanted to.

Quoting N1120A (Reply 30):
Finally, the high yields and need for flexibility in ticketing in the market fits WN's model perfectly.

You may be right. I don't know how "front cabin" the intra-state and southeast Alaska routes are, so it could be fine.

Quoting N1120A (Reply 30):
I don't know if that is true. WN does offer a superior main cabin product as far as comfort goes. Further, their fare structure is far better than either FL or AS.

A seat assignment in First/Business versus no seat assignment in economy may make a difference and it may not. I'm assuming it's a draw for the folks who enjoy it currently, and if it goes away, I'm sure Delta and United will be picking up some spillage. But again, you may be right.

-Dave
-Dave


MAX’d out on MAX threads. If you are starting a thread, and it’s about the MAX - stop. There’s already a thread that covers it.
 
SPREE34
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Thu Dec 20, 2007 7:50 pm



Quoting Flighty (Reply 23):
Very interesting that Gary is annoyed at shareholders.

I didn't get that from the article.

Quoting Flighty (Reply 23):
I am amazed WN shareholders are not more activist than they are

Why should they be? They are making money off of their stock, and have for over 35 years. They seem smart enough to leave managing to the managers who have been making money with an airline for 3 decades. The only airline to do that.

Quoting Flighty (Reply 23):
WN has been screwing its shareholders for years.

Huh? If that was truly the case they wouldn't have any shareholders. WTF are you talking about?
I don't understand everything I don't know about this.
 
sphealey
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Thu Dec 20, 2007 7:50 pm

Alitalia. Perfect match.

sPh
 
Iloveboeing
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 7:51 pm



Quoting Boeing7E7 (Reply 32):
AirTran or Alaska. Everyone else is too intrenched and has too many headaches.

I think those would be good combinations. Merging with FL would give WN an ATL presence and more 73Gs, while an a merger with AS would give them a Northwest US presence, Mexico, and a good fleet of 737NGs.
 
avek00
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Thu Dec 20, 2007 7:56 pm



Quoting N1120A (Reply 20):
That would never happen. It couldn't even get anti-trust approval.

WN can get antitrust approval in a proposed merger with just about anyone. It's worth noting that the DOT has historically focused antitrust scrutiny on carrier concentration on specific routes, not merely city or airport market share.

Quoting N1120A (Reply 30):
I don't know if that is true. WN does offer a superior main cabin product as far as comfort goes. Further, their fare structure is far better than either FL or AS.

AirTran does indeed benefit from having a Business Class. It's an excellent marketing gimmick for high-frequency business travelers, and also stimulates incremental traffic given the way it's priced.
Live life to the fullest.
 
dl767captain
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:03 pm

The mergers could get interesting. But i wonder if fleet type will be their concern. Like if they bought ATA would they get rid of the 757s? I could really see them going with AirTran, and maybe then going after midwest (which probably wouldn't happen since midwest obviously doesn't want to be bought out). This combo would give WN a pretty good foot in the south, especially ATL which they don't ever serve. That is the most basic if they want fleet commanality and some routes and gates that already exist. But i can't really see them merging/acquiring with someone like American or any other large carrier like that. WN seems to base most of their profitability on domestic routes with all the same plane and all economy for a very low price. It would be interesting though to see them take over someone like US airways and make an all economy international airline, think how cheap the tickets could be
 
atmx2000
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:11 pm



Quoting N1120A (Reply 25):
They do nothing of the sort. Their oil speculation is separate from their fuel acquisition.

I think what he was implying was that flying earns less profit on a given amount of fuel than could be had by simply selling the hedges.
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Iloveboeing
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:12 pm



Quoting DL767captain (Reply 39):
WN seems to base most of their profitability on domestic routes with all the same plane and all economy for a very low price

But WN has been moving away from an "all low fares" strategy. They are trying to attract more business travelers. By acquiring AA, they would gain access to places like DFW, ORD, BOS, JFK, and MIA and they would have an international network. As I said earlier, the AA employees might like being under the leadership of WN management rather than the current management.
 
bobnwa
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:21 pm



Quoting SPREE34 (Reply 35):
Why should they be? They are making money off of their stock, and have for over 35 years. They seem smart enough to leave managing to the managers who have been making money with an airline for 3 decades. The only airline to do that.

How have they been making money off their stocks for over 35 years. The dividends have been negligible.
 
atrude777
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:26 pm



Quoting Iloveboeing (Reply 41):
By acquiring AA, they would gain access to places like DFW, ORD, BOS, JFK, and MIA and they would have an international network.

DFW-already done via DAL.
ORD-Already done via MDW
BOS-Done via MHT/PVD
JFK-N/A though some argue ISP
MIA-done via FLL.


Alex
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N1120A
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:36 pm



Quoting Avek00 (Reply 38):

WN can get antitrust approval in a proposed merger with just about anyone. It's worth noting that the DOT has historically focused antitrust scrutiny on carrier concentration on specific routes, not merely city or airport market share.

Historical focus doesn't necessarily apply when you are talking about the largest domestic carrier buying the largest carrier in the world.

Quoting MasseyBrown (Reply 33):

Look at their stock graph for the last 5 years. Jan '03 is was about $14; today $12 and change.

Which isn't a huge difference and more importantly the stock isn't volatile or at risk for being rendered worthless thorough a reorganization.

Quoting PlanesNTrains (Reply 34):
Well, I was thinking more operationally - different fleets, different cabins - and I certainly agree that they could do it if they wanted to.

The fleets aren't particularly different. FL has a significant, and growing, number of 737-700s and the 717s could well provide WN with the regional plane it has been looking for without the growing planes of building up to a fleet of 50.

Quoting PlanesNTrains (Reply 34):
I don't know how "front cabin" the intra-state and southeast Alaska routes are, so it could be fine.

Remember that most of the milk run type routes in Alaska are all economy.

Quoting Avek00 (Reply 38):

AirTran does indeed benefit from having a Business Class. It's an excellent marketing gimmick for high-frequency business travelers, and also stimulates incremental traffic given the way it's priced.

I do agree that FL has been very smart with their business class, especially the way they charge a very reasonable price for S/A upgrades which allows for incremental revenue growth. WN very well could adopt this model, or could use their own model, which reflects higher yields than FL and a more flexible structure. They could also do some sort of combination where the forward business class was only sold as an add on to the economy fare purchased. That would make all kinds of sense.
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rfields5421
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:39 pm



Quoting Bobnwa (Reply 42):
How have they been making money off their stocks for over 35 years. The dividends have been negligible.

The 'important' people do not count upon or care for dividends except as a small measure of company strength. These institutional investors make their money off trading the stock - buying low and selling high.

The smaller investor who holds a stock for a period of time seems largely happy with the long term appreciation in stock value.
 
rfields5421
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Joined: Thu Jul 19, 2007 12:45 am

WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:42 pm

I can almost guarantee one thing about any acquisition of an airline by Southwest.

It will be someone they can quickly change into their minimal fleet diversity, one class seating, quick turn around mode.

WN is not going to change their core operational principals to meet the structure of anyone they buy.

The acquisition will be the one changing.
 
bobnwa
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 8:48 pm



Quoting RFields5421 (Reply 45):
The 'important' people do not count upon or care for dividends except as a small measure of company strength. These institutional investors make their money off trading the stock - buying low and selling high

I don't think the history of the Southwest stock has been that volatile and you can make money off any stock by buying low and selling high. Why do you think the Southwest stock has been a particularly good stock to buy and sell.
 
catdaddy63
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Joined: Wed Apr 18, 2007 8:27 am

WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 9:03 pm



Quoting Bobnwa (Reply 47):
WN is not going to change their core operational principals to meet the structure of anyone they buy.

The acquisition will be the one changing.

Very well stated! I would be very surprised if WN made a go at a legacy airline, though some international ops under a new division would be possible. Dealing with the various unions and employee attitudes would make that task next to impossible. I think that is the main reason we haven't seen any serious takeovers yet. It would be extremely difficult to get the labor unions on board as there would be substantial job cuts due to overlap between the airlines. It's going to be an interesting 2008 for the airline industry.
 
avek00
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WN(Southwest) CEO - We Might Make An Acquisiton

Thu Dec 20, 2007 9:28 pm

Quoting N1120A (Reply 44):
Historical focus doesn't necessarily apply when you are talking about the largest domestic carrier buying the largest carrier in the world.

Perhaps, but bear in mind that the DOT has very consistently applied the route-specific inquiry framework post-deregulation, even in mergers that, on their face, created fortress hubs in large and midsize markets (the latter is even more noteworthy because while a competitor could arguably find some way to compete against a giant in a large market (e.g., LA or NYC), a "midsize" market like MSP or CLT does not lend that same possibility).

And lest we forget, the DOT has NEVER refused a merger that was actively sought by both carriers involved.

[Edited 2007-12-20 13:52:41]
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