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Old Jul 19, 13, 9:17 am   #1
 
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Merger rumors?

I know. There's always a new rumor to go around, but coming from a senior (looking, at least) FA, not the kind you'd expect pointless gossip to come from, this seemed to take hold with me.

The new rumor is an old one, but at a new, more opportune time -- Alaska is in the sights of SWA. With a complimentary route map and compatible fleet, and regardless of AS' financial status, it all seems to click.

Except for one thing: AirTran's not completely folded in yet.

Now, if a company were brave enough to be only 70-80% done with integrating one merger to start fresh with another, I'd believe this.

The physical characteristics fit squarely in SWAs plan. 737s in the fleet, some ETOPS certified 800s already, already on the list to get MAXs when Boeing gets them built...

The benefits I see here:

* ETOPS rated fleet gets SWA to Hawaii and other over-water destinations (Bahamas, Cancun, etc.)
* Extends the SWA route map further into the Pac NW and Alaska
* Easily integrates into the overall staff without taking on too many heads (Alaska outsources much of their ground ops already)

The cons I see would be:
* Alaska has a cargo business that I'm not sure SWA would care too much about
* Native Alaskans would probably not be too happy to lose something that's "theirs" with the Alaska namesake, so the PR / image backlash could be ugly

What other +/- can the FT folks think of?

Does this have a shot at reality in 2014 / 2015 once the AirTran nameplate vanishes?


Edit Yes, SWA has a cargo business, I just hear so little about it, I'm not sure how large of a business it is, nor is it likely one that's got enough business to justify dedicated Cargo planes, like Alaska has -- they have a handful of 737-400Cs in fleet.

Edit Yes, I read an outdated note about AS not doing well financially. I've edited that statement, since no number of "whoops" comments can keep others from pointing it out...

Last edited by ohange; Jul 19, 13 at 11:24 am.. Reason: Added note about SWA Cargo, removed misleading note about AS financial status
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Old Jul 19, 13, 9:25 am   #2
 
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This could be exactly what WN needs to tap into the lucrative King Salmon, Kotzebue, and Deadhorse markets!
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Old Jul 19, 13, 9:38 am   #3
 
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Merger rumors?

It's an interesting rumor. I think it may fit Southwest well, but it may hurt Delta more. Delta would have a huge hole in the map if the Alaska code shares went away, American to a lesser extent.

But honestly, after seeing this AirTran merger, I don't think Southwest acquiring Alaska is in the consumer's best interest.
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Old Jul 19, 13, 9:42 am   #4
 
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Make book on it. Bob Jordan won't even break a sweat, having visualized the FL takeover so skillfully.
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Old Jul 19, 13, 9:48 am   #5
 
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Straight from the show "Gossip Girls".

I don't know where you got the info that AS is not doing well financially - they have shown a net profit in each of the last four years and the stock price has more than doubled from $25 to $60 over the same period. Their balance sheet is one of the healthiest in the US airline industry. AA, UA and DL would love to have their ratios. Every analyst has a "buy" or "hold" rating on AS. Hardly "not doing well".

As for fleet and routes being complimentary -you can say the same about AS and UA, DL, AA. AS compliments everyone -AA, UA and DL are buying large 737 fleets. So what? Little overlap between AS routes and anyone.

This rumor is just that..
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Old Jul 19, 13, 10:06 am   #6
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Originally Posted by ryerflyer View Post
I don't know where you got the info that AS is not doing well financially - they have shown a net profit in each of the last four years and the stock price has more than doubled from $25 to $60 over the same period.
Indeed, didn't AS just announce a dividend for shareholders?
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Old Jul 19, 13, 10:14 am   #7
 
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Originally Posted by ryerflyer View Post
This rumor is just that..
As I said in the subject. It's a rumor.

And, to your credit, the article I checked about AS financials was a bit dated, so who's to say, right?

You ask any corporate strategist over a beer about who should merge or divest with / from whom, and there's always at least a 3-beer conversation to be had at any point in time.

And, it's not like the most reliable inside scoop on a merger is going to come from a random FA.
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Old Jul 19, 13, 10:34 am   #8
 
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Originally Posted by ohange View Post
As I said in the subject. It's a rumor.
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Old Jul 19, 13, 10:52 am   #9
 
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Originally Posted by ohange View Post
As I said in the subject. It's a rumor.

And, to your credit, the article I checked about AS financials was a bit dated, so who's to say, right?

You ask any corporate strategist over a beer about who should merge or divest with / from whom, and there's always at least a 3-beer conversation to be had at any point in time.

And, it's not like the most reliable inside scoop on a merger is going to come from a random FA.
I honestly don't know which occurs on a more reliable basis--this rumor, or the swallows returning to Capistrano...
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Old Jul 19, 13, 11:00 am   #10
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Originally Posted by ohange View Post
The new rumor is an old one, but at a new, more opportune time -- Alaska is in the sights of SWA. With a complimentary route map and compatible fleet, and Alaska not doing well financially, it all seems to click.
Alaska Airlines not doing well financially? You should do a little research. Cash flow, ROIC and market cap are pretty healthy. Take a look at the 8-K filing from 7/11/13.

http://phx.corporate-ir.net/phoenix....361&p=irol-sec
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Old Jul 19, 13, 11:08 am   #11
 
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Originally Posted by 3Cforme View Post
Alaska Airlines not doing well financially? You should do a little research. Cash flow, ROIC and market cap are pretty healthy. Take a look at the 8-K filing from 7/11/13.

http://phx.corporate-ir.net/phoenix....361&p=irol-sec

Agree, I already retracted (corrected myself), saying that the article that I found about their financial status being outdated.

However, just because the chips aren't down, it doesn't mean they couldn't merge, it was just one (albeit false) data point in the overall picture.
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Old Jul 19, 13, 11:19 am   #12
 
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Originally Posted by ohange View Post
Alaska is in the sights of SWA. With a complimentary route map and compatible fleet, and Alaska not doing well financially, it all seems to click.
You really need to do your homework before spreading misinformation.

Quote:
"Unlike most of its competitors, Alaska Airlines has been profitable for 33 out of the last 39 years, and it has avoided merging with other airlines to stay afloat.
http://www.businessinsider.com/alask...#ixzz2ZVrLuhlq
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Old Jul 19, 13, 1:21 pm   #13
 
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From my understanding Alaska has come out numerous times to say they aren't interested in merging with anyone. I think the most recent time was when AA was looking for other potential merger partners besides US Air.

I don't see a Southwest-Alaska merger happening without it being a hostile takeover, and that's something that Southwest really can't afford to do at this point.

Personally since I am LAS based and do extensive work in the Pacific Northwest, it'd likely benefit me. However, I still wouldn't want to see it happen. I like and prefer flying Alaska to PDX and SEA compared to Southwest.
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Old Jul 19, 13, 1:23 pm   #14
 
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Originally Posted by nineworldseries View Post
This could be exactly what WN needs to tap into the lucrative King Salmon, Kotzebue, and Deadhorse markets!
Not to mention the new Steamboat Springs route....
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Old Jul 19, 13, 1:27 pm   #15
 
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Originally Posted by dieuwer2 View Post
You really need to do your homework before spreading misinformation.



http://www.businessinsider.com/alask...#ixzz2ZVrLuhlq
"Alaska Alaska Air Group, parent of Alaska Airlines and Horizon Air, reported a 2012 net income for 2012 of $316 million, up 29% from a $245 million net profit in the year-ago period. The company said this is its ninth consecutive year of adjusted profits and the third year in a row the company has exceeded its goal of a 10% return on invested capital. Revenue rose 8% to $4.66 billion while expenses increased 7% to $4.13 billion"

Sounds like AS doesn't need anyone to merge with. The has never been any "dated" info suggesting AS isn't doing well financially.
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