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Southwest airlines leveraged buyout issue

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fubar

Member
Joined
Jun 19, 2003
Posts
9
why would Southwest get rid of their poison pill clause in their contract if this makes them more in line for a leveraged buyout?

Does anyone know what Southwest is doing to not be a target of a leveraged buyout?
 
fubar said:
why would Southwest get rid of their poison pill clause in their contract if this makes them more in line for a leveraged buyout?

Does anyone know what Southwest is doing to not be a target of a leveraged buyout?
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They want Doug Parker to take them over. Just think, he and Herb drinking Wild Turkey together, then fighting over who gets to drive the other home.....


Bye Bye--General Lee
 
General Lee said:
They want Doug Parker to take them over. Just think, he and Herb drinking Wild Turkey together, then fighting over who gets to drive the other home.....


Bye Bye--General Lee
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:laugh: :laugh: :laugh:

I think doogie's more into daquari's and fu fu drinks! After all, he did spend time in a WOMEN'S prison!

737
 
There was some very strong call option buying going on in SWA a few weeks ago. Very unusual in the face of recent downgrades of all airline stocks. Maybe someone who matters already knows something?
 
fubar said:
why would Southwest get rid of their poison pill clause in their contract if this makes them more in line for a leveraged buyout?
Activist shareholders did this.
Does anyone know what Southwest is doing to not be a target of a leveraged buyout?
Click to expand...
No clue - I have a guess for what the plan is, but I'm not a finance major so take the following with several grains of Mortons finest. The only ways to make us less actractive are:
A) poison pill
B) higher stock price
C) more debt

Obviously, plan A has been thwarted. If we could get the stock price to go up we would. But how to acquire debt in a way the increases sharholder value? ..... Maybe General Lee can look forward to those LBB overnights afterall.
 The head shed has stated that they are aware of it, so I have to trust them to be on it. I am concerned, but the worst thing that could happen is that we end up as screwed up as the rest of the airlines. The chances that one of our competors will ever have anything worth a LBO are slim to none. And General Lee, in your case Slim is out iof town ;) Just joking.
 
Gary Kelly was interviewed on CNBC two weeks ago and stated that he did not think SWA was a good LBO candidate because the culture would have to be preserved for it to be successful. In an LBO, the corporate culture of SWA would probably be diminshed. I also read that the poison pill provision was eliminated to improve flexibility of the board for various provisions, not just a possible LBO maneuver.
 
fubar said:
why would Southwest get rid of their poison pill clause in their contract if this makes them more in line for a leveraged buyout?

Does anyone know what Southwest is doing to not be a target of a leveraged buyout?
Click to expand...

It depends on your perspective.

If you are an employee of SWA then a buyout would obviously be VERY VERY BAD.

However, if you are one of the institutional investors that own 75.5% of SWA then a buyout is a very very good thing.

Investors don't care about culture, or even if you have a great company, all they care about is ROI (return on investment). And quite frankly SWA has a great airline with a stock that has done horribly since the end of 2000. I don't know the exact sequence of events, but obviously, at some point, the majority of shareholders voted to have the poison pill provisions removed from the by-laws. Unfotunatelly, employees don't run companies and have no say in these types of issues.

A buyout is not always bad, it just depends who buys you out. If you are lucky, a group led by some insiders (maybe Herb) would use a LBO to take SWA private. Alternatively, there are groups that take companies over - and then let them run as before - i.e Berkshire Hathaway. There there are the others.

later
 
The way to prevent an LBO is to increase the companies debt.
 
This is exactly what happened at NWA with the beach boys(Al Checci & Gary Wilson). They took an airline that had virtually no debt, paid cash for airplanes,(sound familiar) owned valuable real estate in Tokyo worth billions in todays dollars and had turned a profit every year from something like 1956-1989 or 1990. Now look at this place. Granted we did not have a culture to ruin due to a longtime fueds with mangagement but we were extremely financially strong. They sucked all the money and assets out of the company for themselves and their shell corporations and left us with the carcass(about like TWA after Ichan) The SWA employees have a unique thing going with their mgt. because you can trust them to do the right thing even if you may not like it. If you get LBOed, a new mgt. team WILL be put in place and the sucking of assets will begin and you will begin the downward slide we did. Good luck and hope it does not happen.....
 
Well clearly any LBO firm that would buy Southwest would need to reduce costs and actually increase efficiencies in order to pay down any new debt or to maximize any potential return. Investors expect 15-20% return on any big investments.

Translation: you guys will need to fly even more flights per day. Instead of 4-6 legs per day you will be flying 6-8 legs with 15 minute turns. Wow - that will be interesting to watch...
 
johnsonrod said:
Well clearly any LBO firm that would buy Southwest would need to reduce costs and actually increase efficiencies in order to pay down any new debt or to maximize any potential return. Investors expect 15-20% return on any big investments.

Translation: you guys will need to fly even more flights per day. Instead of 4-6 legs per day you will be flying 6-8 legs with 15 minute turns. Wow - that will be interesting to watch...
Click to expand...

Yeah, then we can fly 10 hours a day.
 
From today's Dallas Morning News.

Market Cap: AMR = $6.7B; SWA = $12B.

Kinda makes you think who's the bigger better fish.
 
AMR wants to buy out SWA because their management is making AMR's look like a bunch of a$$holes. Uh, well, hummm... TC
 
During training two weeks ago. Mr Kelley said an LBO is not even on his plate. He has many much bigger fish to fry... For what is worth.
 
Benhuntn said:
During training two weeks ago. Mr Kelley said an LBO is not even on his plate. He has many much bigger fish to fry... For what is worth.
Click to expand...

He said the same thing during an interview on CNBC w/ regard to last quarter's reporting.

I think the most illuminating statement he made was that an LBO makes little to no sense for a company like SWA because the culture is almost impossible to integrate post LBO or even value as an asset.
 
Mr. Kelley will not have any say in the matter. If a group of investors want to LBO SW it will be to enrich themselves. Its "just business". He will go along with their plan or deliver the "leaving for personal reasons" speech. Then you will see a hitman such as Neil Cohen come in and the raping will begin. You will not be able to do anything but layback and enjoy the raping. Don't get me wrong, I don't wish this to happen as I have many friends and family in your pilot ranks. I want you guys to get raises and an improved contract, so at some point in the next decade us bottom feeders at NWA can have something to shoot for. But don't think for one minute GK or any of the current mgmt. team have any say in the matter. Good luck.
 
Old School said:
Gary Kelly was interviewed on CNBC two weeks ago and stated that he did not think SWA was a good LBO candidate because the culture would have to be preserved for it to be successful. In an LBO, the corporate culture of SWA would probably be diminshed. I also read that the poison pill provision was eliminated to improve flexibility of the board for various provisions, not just a possible LBO maneuver.
Click to expand...

Corporate culture. Success. Poison pill. They don't care about all that crap. All they want is to milk the cash cow dry.
 
That would be about it.. Then he will ask the employees to help service the debt:) once things don't pan out as smoothly as he envisioned.
 
Cobraair75drvr said:
Mr. Kelley will not have any say in the matter. If a group of investors want to LBO SW it will be to enrich themselves. Its "just business". He will go along with their plan or deliver the "leaving for personal reasons" speech. Then you will see a hitman such as Neil Cohen come in and the raping will begin. You will not be able to do anything but layback and enjoy the raping. Don't get me wrong, I don't wish this to happen as I have many friends and family in your pilot ranks. I want you guys to get raises and an improved contract, so at some point in the next decade us bottom feeders at NWA can have something to shoot for. But don't think for one minute GK or any of the current mgmt. team have any say in the matter. Good luck.
Click to expand...

Hey man. Thanks for the pep talk....... I think. LOL. Let's that little sliver of doubt come raging in.

BTW. Love the Cobra nickname (and your "handle") you guys have. Although after this last round I might have to come up with something slightly less antagonistic.

Gup
 
Air Tran guys get the red eyes.
 

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