Originally Posted by
iahphx
I guess it took Spirit's announcement that they might go out of business to finally boost Frontier's stock. All the majors are up, too, but not as much as Frontier. This does sort of make logical sense.
If Spririt were to go out of business, I think that would also increase the odds of another airline buying Frontier to basically shut it down. Then you would get the "desired" monopoly-like pricing (and, in fairness, domestic flying is basically profitless for the US airlines now). I don't like to invest in failing companies on the theory they might be bought, but this is a plausible investment strategy. And, who knows, being the "last man standing" in the ultra low cost airline space could be a real business.
What I've been trying to work out is where the NK airplanes go in the various scenarios. We're getting to overcapacity for the current demand environment, but those NK airplanes are going to end up somewhere. ~120 320/321 NEOs and ~70 CEOs; don't know what's leased vs owned. An acquisition keeps a huge chunk of those flying, unless the acquirer gets rid of the CEOs or older planes of their own. Asset sales where planes are part of the deal probably continue to fly, unless reconfigured first and/or used to retire existing older aircraft. Leasing companies will definitely be looking to place those planes. Maybe some end up outside the US market if this happens?
Taking ~70 planes out of the system will help with the weaker demand environment, but those NEOs are going to fly somewhere.