Airtran upgraded on consolidation outlook with Southwest

[funnyman12]

"As low-cost airlines like Southwest Airlines Co (LUV.N: Quote, Profile, Research) and Airtran Holdings (AAI.N: Quote, Profile, Research) look to adapt low fare models to a high cost environment, the brokerage expects fewer low fares.
As a result, winning market share will be harder, the Credit Suisse said in a research note to clients.
The combination of Southwest Airlines and Airtran has appeal as it represents an alternative for Southwest Airlines to gain share in key markets, Credit Suisse addeds.
It raised Airtran to "outperform" from "neutral" based on its revised consolidation outlook."

Hmmmm....interesting now that Wall Street is mentioning the prospect of a WN/Airtran merger. This is the first article I have seen directly mentioning a merger between the 2. Sounds alot like what Wall Street said with Delta/NWA and United/Continental the end of last year. We shall see.

 

[Benhuntn]

Now that Wall Street is thinking about it, it will never happen.

 

[Freight Dog]

If it makes sense, the airline industry won't do it.

 

[CrewDog97]

Same info on a different site...

NEW YORK — Airline stocks benefited from an overall market surge Tuesday, despite downgrades from a Credit Suisse analyst and a new record for oil prices.
The Amex Airline Index rose 3 percent to 28.56, driven higher by news that the Federal Reserve and other central banks will pump $200 billion into the financial markets to help ease the strain from the credit crisis. The Dow Jones Industrial Average gained more than 250 points and the S&P 500 Index rose more than 25 points.
At the same time, oil prices remained elevated, stoking fears that airline profits will tumble on high fuel costs and weaker demand. Light, sweet crude for April delivery was up 2 cents at $107.92 a barrel on the New York Mercantile Exchange, after rising as high as US$109.72 overnight. Fuel is one of the airline industry's top costs.
Credit Suisse analyst Daniel McKenzie changed his view on the sector to "Market Weight" from "Overweight" and downgraded AMR Corp., Northwest Airlines Corp. and US Airways Group Inc., citing "out of control crude prices and a recession outlook."
McKenzie lowered his rating on AMR to "Underperform" from "Neutral"; and his rating on Northwest and US Airways to "Neutral" from "Outperform." He also lowered price targets and estimates for several other carriers.
McKenzie also said he is "less enamored" with a combination of Delta Air Lines Inc. and Northwest that the two carriers have reportedly been discussing. Delta faces more competition from low-cost carriers in its core markets, he said. With high crude costs and recession worries, the carriers risk "squandering deal synergies" at the current time.
Delta shares rose 26 cents, or 2.2 percent, to to $12.24 while Northwest rose 5 cents to $12.38. AMR shares rose 18 cents to $10.48 and US Airways fell 10 cents to $10.18.
McKenzie also upgraded low-cost airline AirTran Holdings Inc., calling it an "intriguing possibility" as an acquisition target for its Denver-based peer, Southwest Airlines Co. That sent AirTran stock up 40 cents, or 6.2 percent, to $6.85.
Although Southwest has said it is not pursuing acquisitions, McKenzie noted that the carrier "remains locked out" of markets outside its core area. AirTran's Atlanta hub would provide Southwest with entry to an important business traveler market.
Southwest shares rose 26 cents, or 2.2 percent, to $12.33.

Pretty interesting road ahead at any rate...

 

[jke406]

McKenzie also upgraded low-cost airline AirTran Holdings Inc., calling it an "intriguing possibility" as an acquisition target for its Denver-based peer, Southwest Airlines Co.

Sounds like this guy doesn't know his ass from a hole in the ground.

If he doesn't even know where SWA is based, why would anyone pay any attention to anything he says about the industry?

 

[funnyman12]

Well regardless of the source, once wall street and/or the media suggest something, it can snowball. This is the first time I have seen the media mention the possible aquisition. Of course it has been a rumor pilots have thrown around for a while. We'll see if we start hearing more from folks other than pilots.

 

[AFcitrus]

Not that I have any desire to be involved in the consolidation mei-lei but here is some food for thought.

The entire time I've been at Airtran, all we heard about was a Midwest merger. Management continually denied it but the rumor kept going... and low and behold the attempt became reality.

Additionally, for the last 3 years we have heard rumbling of Delta/NWA merging. It was denied by everyone but what is happening now?

Lately, all we here about at AAI is the SWA rumor. My bet is that IF industry consolidation occurs you WILL see a WN/AAI MERGER. It will be done fairly and will recognize the efforts of all employees. Captains' lists will merge in some manner (see new legislation and A-M) as will the two FO lists.

Again, I think AAI is one the strongest company's in the industry with very intelligent management and we would be very capable of riding this through alone. But once industry consolidation momentum starts everyone is going to be looking for a "dance partner" and will not want to be standing alone when the music stops.

cheers!

 

[75M]

But once industry consolidation momentum starts everyone is going to be looking for a "dance partner" and will not want to be standing alone when the music stops.

Why not?

 

[easydoesit]

Sounds like this guy doesn't know his ass from a hole in the ground.

If he doesn't even know where SWA is based, why would anyone pay any attention to anything he says about the industry?

Dude, do you ever have anything positive to say? BTW, please make that disgusting avatar go away. It gives me the heebeegeebees.

 

[HalinTexas]

Not that I have any desire to be involved in the consolidation mei-lei but here is some food for thought.

The entire time I've been at Airtran, all we heard about was a Midwest merger. Management continually denied it but the rumor kept going... and low and behold the attempt became reality.

Additionally, for the last 3 years we have heard rumbling of Delta/NWA merging. It was denied by everyone but what is happening now?

Lately, all we here about at AAI is the SWA rumor. My bet is that IF industry consolidation occurs you WILL see a WN/AAI MERGER. It will be done fairly and will recognize the efforts of all employees. Captains' lists will merge in some manner (see new legislation and A-M) as will the two FO lists.

Again, I think AAI is one the strongest company's in the industry with very intelligent management and we would be very capable of riding this through alone. But once industry consolidation momentum starts everyone is going to be looking for a "dance partner" and will not want to be standing alone when the music stops.

cheers!

That last paragraph is the exact reason to not merge with FL. SWA or anyone else would have to pay too much to dance. While FL would offer some routes to cities that SWA doesn't serve, there is little high rev. international flying, and lots and lots of route duplication. Not to mention the B717's. A dead airplane with limited capability as compared to other airframes out there.

Now if FL starts to lose money and gets close to BK, then watch out. There might even be a bidding war.

 

[radarlove]

. Captains' lists will merge in some manner (see new legislation and A-M) as will the two FO lists.

Uh huh. Three-year Airtran captains with nine-year SWA f.o.s? I don't really see that working out.

 

[PanPan]

SWA or anyone else would have to pay too much to dance.

With the trend in oil, we are getting cheaper by the minute. (Just like the women I date)

http://finance.yahoo.com/q?s=AAI

market cap at $540 mil

 

[AFcitrus]

Uh huh. Three-year Airtran captains with nine-year SWA f.o.s? I don't really see that working out.

I thought upgrades were running 5-7 years at SW, why would someone still be an FO at nine years - unless it is by choice. If it is by choice then that person is hanging it out there and may get "caught with their shorts down" when/if consolidation begins. That's what our bypassing FO's have to think about every time they bypass CA upgrade for quality of life. It is a tough call and should not be taken lightly in this volatile period of time.

 

[atafan]

I know you think I'm crazy but I predict next week SWA will announce the purchase of a scaled down ATA Airlines and future plans for an agressive International expansion in Q4 of this year.

No specifics at this time but that's my opinion and some others closer to the money trail.

 

[Whataburger]

I thought upgrades were running 5-7 years at SW, why would someone still be an FO at nine years - unless it is by choice. If it is by choice then that person is hanging it out there and may get "caught with their shorts down" when/if consolidation begins. That's what our bypassing FO's have to think about every time they bypass CA upgrade for quality of life. It is a tough call and should not be taken lightly in this volatile period of time.

Right now projections show 9yr first available up-grades with the current slowdown and slowed growth.

 

[Whataburger]

That last paragraph is the exact reason to not merge with FL. SWA or anyone else would have to pay too much to dance. While FL would offer some routes to cities that SWA doesn't serve, there is little high rev. international flying, and lots and lots of route duplication. Not to mention the B717's. A dead airplane with limited capability as compared to other airframes out there.

Now if FL starts to lose money and gets close to BK, then watch out. There might even be a bidding war.

Regarding 717s. AirTran has tons of options for 737s. Should something like a merger happen I believe the outcome would be an all 737 fleet.

 

[Irishav8r]

I thought upgrades were running 5-7 years at SW, why would someone still be an FO at nine years - unless it is by choice. If it is by choice then that person is hanging it out there and may get "caught with their shorts down" when/if consolidation begins. That's what our bypassing FO's have to think about every time they bypass CA upgrade for quality of life. It is a tough call and should not be taken lightly in this volatile period of time.

That was until age 65 and growth reductions....10-12 yrs is the projection now.

 

[Irishav8r]

Well 10-12 yrs is what I saw as the projection, that is.....2019 hired in 07

 

[50Pesos]

Sounds like this guy doesn't know his ass from a hole in the ground.

If he doesn't even know where SWA is based, why would anyone pay any attention to anything he says about the industry?

OHHHH the irony, the pot calling the kettle black.

 

[HalinTexas]

Regarding 717s. AirTran has tons of options for 737s. Should something like a merger happen I believe the outcome would be an all 737 fleet.

Well then you just added two more reasons not to merge.

Are WN's "options" cheaper than FL's?

Making a merged WN/FL all-B737 fleet isn't cheap. Probably more expensive to dump the B717 than keeping them.

 

[Reebo]

I know you think I'm crazy but I predict next week SWA will announce the purchase of a scaled down ATA Airlines and future plans for an agressive International expansion in Q4 of this year.

No specifics at this time but that's my opinion and some others closer to the money trail.

I don't think you're crazy at all.

Your scenario makes the most sense. ATA has been cut to the bone for easy digestion. They bring with them ETOPS certification and extensive International experience. I don't think this was the plan when WN and ATA began the code share, but the market has changed and it becomes a win/win for WN and the Global logistics group.

 

[airlinepilot]

Jr Capt at Airtran vs Junior at SWA

Junior Capt at Airtran had 3 yrs on the property in Jan 2008, Junior Capt at SWA will have 8 years on property in June of this year.

 

[radarlove]

I thought upgrades were running 5-7 years at SW, why would someone still be an FO at nine years - unless it is by choice. If it is by choice then that person is hanging it out there and may get "caught with their shorts down" when/if consolidation begins. That's what our bypassing FO's have to think about every time they bypass CA upgrade for quality of life. It is a tough call and should not be taken lightly in this volatile period of time.

Ok, sorry. I meant, "Uh huh. Three year Airtran captains paired with seven year SWA f.o.s? I don't see that working out."

 

[HalinTexas]

Jr. CA at ATA is 11 years and 1 month...

 

[AFcitrus]

Ok, sorry. I meant, "Uh huh. Three year Airtran captains paired with seven year SWA f.o.s? I don't see that working out."

Who knows? There would most certainly be fences for many years to protect everyone's QOL.

I think the point is that these mergers are going to happen if they make sense from a business standpoint - regardless of whether the pilots work out pre-agreements or not. It seems that is what Delta/NW are starting to say now.

The new legislation forces pilots (from different unions) whose companies merge to work it out fairly and equitably or face "binding arbitration" for senority integration. The binding arbitration must be "fair and equitable to both sides" thereby eliminating any chance of a landslide one way or the other. I, for one, am glad this happened because none of us knows which side of a merger we may end up on someday. Airtran had no intention of stapling Midwest pilots (or requiring them to interview for their jobs). In turn, Airtran pilots won't have to worry about being stapled or having to interview.

Someday, as mighty as some SW pilots seems to think they are, they too may find themselves on the shorter end of the merger stick but they will be protected from a one-sided integration just the same.

It's a beautiful thing. So let's just sit back, relax, and try to enjoy the ride since in the end we really have little say in what will or won't happen.

Happy Flying!

 

[Citrus531]

Well then you just added two more reasons not to merge.

Are WN's "options" cheaper than FL's?

Making a merged WN/FL all-B737 fleet isn't cheap. Probably more expensive to dump the B717 than keeping them.

Yeah where would 87 717's go? Not like anybody would be beating down the door to pick them up I would think?!?

 

[PCL_128]

Ok, sorry. I meant, "Uh huh. Three year Airtran captains paired with seven year SWA f.o.s? I don't see that working out."

You may not "see it," but no arbitrator will issue an SLI award that requires the downgrading of one group's Captains to allow the other group's FOs to upgrade. Just won't happen.

 

[critterair2]

Maybe I'm the crazy one, ANYTHING SWA has planned hasn't been leaked outside of the big D! MY OPINION, all the SWA/Citrus talk is just swa's way to put pressure on Delta, forcing them to play their hand. SWA will be after Frontier or Spirit.

 

[airlinepilot]

Frontier????

I was at the HQ and we had our little informal discussion with the director of training....he specifically said you can would rule out Frontier because they only have about 90 days cash on-hand. "Why pay for something when you can pick up the pieces for hardly nothing". As far as SL between Airtran and SWA. If you used DOH, the majority of the Airtran guys would be back in the right seat. They would probably be pay protected. Which in the eyes of the law is fair and reasonable. Law suits from two previous takeovers lost due to the fact the pilots didn't suffer any economic loss. The judge didn't seen to care if their ego was hurt by not being in the left seat.

 

[MTV]

Yeah where would 87 717's go? Not like anybody would be beating down the door to pick them up I would think?!?

A few years ago the 717 was going to save ATA, everyone was going to be a captain. They could not fill the 737 800 and the 717 was a perfect fit. That was the company line anyway.