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.