Originally Posted by
sfozrhfco
So far, it does seem that AS management did not do their homework on this deal and acted out of fear rather than rationality. Many airlines have been bought and basically disappeared after the acquiring airline found greater value in just eliminating a competitor completely rather than making the new route network work. In this case, AS seems to be doing the opposite. They are dragging down their own profitable/successful business while helping their competitors in the process. I think the hole they are in is only getting deeper and I would love to know what the plan is to either make the former VX network profitable at the same levels as AS was or how they plan to shift all the extra capacity currently used on marginally profitable/loss making ventures into something else that would be more successful. VX was just barely making money at much lower wage levels. It is really difficult to see how AS is going to make this work...but I guess we have to be patient and see if they have a magic plan nobody knows about just yet to turn things around.
The VX investors really come out looking like geniuses for off loading the debt and getting twice the market cap as before the bid--while adding no additional market cap to ALK.
There are a lot of posts like this on forums. Wall Street has trained the economy to depend on instant gratification. I don't have any idea what AS management is planning, but I hope they are planning for the future. I think a few years of decreased profits, or even small losses might be neccisiary to build what they have mind. I assume VX wasn't part of the original plan, but their hands were forces when faces with the possibility of B6 gaining a foothold. That would probably have been a major obstacle to any plan.
Of course no one here is party to the thinking of upper management, aside from their public statements. So it's all just speculation.