Joe's confident

[Ty Webb]

6. People are talking as if Air Tran is in so much better financial shape compared to AWA. Last time I looked both airlines are losing money. Both have about the same relative cash positions.

You have got to be kidding. Do a little research before you post, would you?

Since 2000, AirTran has made $155 Mil, AWA has lost $573 million.

AirTran has $808 mil in assets, only $506 mil in liabilities, or a net value of $302 million,

AWA has assets of $1.627 B and liabilities of $1.488 B for a net value of $139 mil.

I would not compare the financials of these two companies, not by a long shot. Also, AirTran may have long-term obligations to buy 737's, the purchase price is extremely low, and the interest rate is ridiculously low. If we couldn;t make money with them, I am sure we could either sell them or lease them out and still be ahead, but I think we'll be keeping them plenty busy ourselves, thank you very much.
http://www.marketwatch.com/tools/quotes/financials.asp?symb=aai&siteid=yhoo&dist=mktwqn

 

[mt2]

Just for grins, here's what Holly has to say. Personally I think Joe is getting desperate with his latest press releases (1000th pilot, confident, etc.).


Why America West May Not Be Crazy

If things go according to plan, America West will also place a bid for ATA on Friday. But unlike the bid from AirTran, which does not include any of ATA's employees, or the bid from Southwest, which appears now to be a type of marketing/codeshare set-up that includes gates, but allows a portion of ATA to remain in business, America West's deal will be for the whole enchilada.

Okay, we all know the situation. Why would America West, which is struggling with high fuel prices and falling earnings, now want to take a chance on taking over an airline that has a solid reputation for not making money?

Okay, first of all, why hasn't ATA made money at Midway? I think it is because, as we have written here many times in the past, it does not seem the airline knows how to make money -- period. They manage for load factor for one thing. I have always wondered if they even know the meaning of the words, "revenue optimization."

As a result, I think the revenue minds at America West could make improvement here.

Secondly, we know AWA has to grow. On this point, if you take both fleets (AWA and ATA) and re-gauge AWA's system and ATA's, guess what? I think that you end up with a company where aircraft size is matched to demand pretty closely -- which could improve revenue opportunities. In addition, AWA currently has no large aircraft orders in place -- a position that would allow AWA to take on the additional aircraft from ATA without having to worry about additional future aircraft coming into the pipeline.

We all know ATA's fleet is too large for the markets they serve. Heck, they know it..

As for hub size, ATA's 14 gates at Midway have been cited as being "too many" for AWA to handle effectively. But, if you look at the size of AWA, and look at the size of the airline's hubs at both Las Vegas and Phoenix, operating the 14 gates at Midway doesn't look particularly daunting. Remember too that AWA is a network carrier, not a point-to-point carrier. As a result, this too gives the airline more need for the 14 gates. Fewer than 14 gates, and the Midway operation might not be large enough to be profitable.

Then there is the ETOPS argument that we have already talked about here. ATA's ETOPS equipment would allow AWA to implement overwater flying (Hawaii in particular) sooner than AWA can do it on its own.

While AWA is currently working on their ETOPS certifications, from what I understsand, the airline is still another year away from completion of the process.

But what about the thorny problems of employee integration, or, "When has a merger ever worked?"

We put that question to one analyst last week who, although he is somewhat skeptical of the numbers side at this stage, having not seen any details, clearly has no reservations about the airline's ability to integrate two work forces, as he said, "I think America West has the culture in place, and has the management smarts to pull this kind of deal off in terms of employee integration. But not every airline could."

Another person close to the airline's bid said to me in an email this week:

"It's been a long hard road to get past the glamour era of Howard Hughes' TWA, Rickenbacker's Eastern, Trippe's Pan Am.We all still hear stories about those glorious Ozark Airlines' wine and cheese baskets. But you know what? Those days are gone. It's a different ballgame now. Those old romantic guys probably never considered planes flying into buildings, bloated cost structures, inefficient mainframe systems, proposed legislation to improve customer service, etc. If the current environment tells us anything, it's that airlines can stop flying (albeit a slow, painful death), airline employees are sometimes forced to find lives beyond this industry or take very steep pay cuts and make correlated lifestyle changes.

I would think that there will be a somewhat different approach to a combined carrier with longer term job security than perhaps either airline could offer on its own. Now of course you're going to have a lot of chest pounding and rhetoric, but if you can see past that and manage to that, I think AWA management can handle the transition."

Another person at America West whom I asked about the deal, and to whom I suggested that AWA didn't seem in the best of financial straits, said, "Yes, but the bulk of our problems right now are fuel based. However, just sitting still and saying, "It will get better if we just click our heels together three times, fuel goes down, capacity comes out, and pigs fly" isn't the answer either."

Could AWA pull a deal like this off? Are there any certainties in this business? No, but after taking a look at several of my key complaints of the past few months a bit more closely this last week, I have to admit -- I don't think Doug Parker and the folks in Phoenix have been smoking strange substances anymore. I can now see the method in the madness more clearly. I now understand why AWA seems convinced it can make the deal work.

 

[Pickle]

Cactus73 said: "They would have to figure out how to shed the L1011 charter side of the business and get someone to step-up to the plate and continue to fill contractual terms with the government"

Get rid of the charter?? No way. The military charter part of the company is making money, even with those L-10s. Now, if you meant get rid of the L-10s and put some more reliable, more fuel efficient airplanes in there (767, A-330/340) then I would agree with you.

 

[Ty Webb]

Who is Holly, and what has she been smoking?

Her "story" is all emotions and feelings, and no facts . . . where did you find this, in "People" magazine?

It even sounds like she has SWA and AirTran confused- it is AirTran who started referring to their bid as a "business partnership", not SWA.

I'm not sure why you even bothered to cut and paste anything from such a ridiculous source.

 

[Cactus73]

Who is Holly, and what has she been smoking?

Her "story" is all emotions and feelings, and no facts . . . where did you find this, in "People" magazine?

It even sounds like she has SWA and AirTran confused- it is AirTran who started referring to their bid as a "business partnership", not SWA.

I'm not sure why you even bothered to cut and paste anything from such a ridiculous source.

Ty Webb,

Holly is Holly Hedgeman. You told me to do a little research before posting? Maybe you should. Holly is one of the most respected and sought after financial airline gurus. She runs the highly successful planebusiness.com web site. But of course, you already knew this because of the extensive research you do before posting.

How do you know what SWA is going to offer when you said she is confused? Holly has a lot of insider sources and senior contacts at almost every airline.

When I said AWA and AAI have similar financials I wasn't talking about debt. One company, AWA has been around since 1983, or course we have bigger liability issues. Up until this quarter, AWA made a profit for the last five. AAI is losing money right now. Fuel prices are hurting all of us. There are a lot of similarities in the two companies situations. You can say what you want about the 737 order but the fact is that they are coming and they aren't all going to ATL. That means AAI needs a home for them. They may be cheap but they aren't free. They need to fly and Air Tran is looking to develop new markets. I'm not slaming Air Tran as you seem to think. I think they are a great company with a good plan. I'm just making an observation that they need a place to put some new airplanes and MDW seemed to be worth $87 million to your CEO.

Research? Holly? Ridiculous source?

Get real!

 

[Cactus73]

Cactus73 said: "They would have to figure out how to shed the L1011 charter side of the business and get someone to step-up to the plate and continue to fill contractual terms with the government"

Get rid of the charter?? No way. The military charter part of the company is making money, even with those L-10s. Now, if you meant get rid of the L-10s and put some more reliable, more fuel efficient airplanes in there (767, A-330/340) then I would agree with you.

At our town hall meetings, Parker has been saying that he doesn't know much about the charter business and didn't think it would be part of any ATA offer. Who knows what will be in the offer, if there is an offer.

 

[FLB717]

I think one of the most missed points is Mr. M. He ownes most of ATA and his ego or desire to run his company as he see's fit will go a long way with the Judge. Unless I am wrong ATA is still a private company, and that carries a lot of weight in court, even during a CH11 ruling.

 

[Pickle]

FLB717 said: "Unless I am wrong ATA is still a private company, and that carries a lot of weight in court, even during a CH11 ruling."

ATA is a publicly traded company, has been since 1993, but George M. owns the majority of the shares. ATAHQ is the ticker symbol.

You are correct about his ego. That is why he likes the AirTran deal so much.... He gets to keep playing "airline owner" with what is left over in IND.

But I do not think that his ego or his owning the majority of the stock will have any sway voer the judge and his ruling. I am hoping the judge does what is best for ALL the creditors, secured and unsecured (employees are unsecured creditors).

My 2 cents is that I am not in favor of the AirTran deal AS IT STANDS, but of course it is the only deal actually on the table right now.

I have lost faith in the current management of this company. I don't think I am the only one.

 

[Cactus73]

Who is Holly, and what has she been smoking?

Her "story" is all emotions and feelings, and no facts . . . where did you find this, in "People" magazine?

It even sounds like she has SWA and AirTran confused- it is AirTran who started referring to their bid as a "business partnership", not SWA.

I'm not sure why you even bothered to cut and paste anything from such a ridiculous source.

Ty Webb,

Just to add more from your well researched post. This is from the Financial Times. The "People magazine" of Wall Street?

"Southwest, by contrast, could - as the best financed airline - easily outspend its rivals. It is expected to make a large cash offer for about five of the Midway gates, alongside a possible $50m-$75m in DIP financing to prop up ATA.

In a significant strategic departure, Southwest is also considering offering a code-sharing relationship with ATA, which would be extremely valuable for the bankrupt company, according to several people involved in the talks. The unusually aggressive move is a reflection of the new management team at Southwest, also evident in its expansion plans at Philadelphia."

 

[Ty Webb]

Ty Webb,

Holly is Holly Hedgeman. You told me to do a little research before posting? Maybe you should. Holly is one of the most respected and sought after financial airline gurus.

Her article was long on emotion, short on facts. If that's typical of her "work", then I wouldn't put too much into it.

Up until this quarter, AWA made a profit for the last five. AAI is losing money right now.

More crap. According to the financials posted on CBS Marketwatch, AWA had two years with small profits, and two years with huge losses, for a total loss over those years of well over $570 million. See for yourself:

http://www.marketwatch.com/tools/quotes/financials.asp?symb=awa&siteid=yhoo&dist=mktwqn

AirTran posted a loss of $10 million in the last quarter, after FL had an unprecedented four hurricanes and oil hit $50 a barrel- go figure. It was our first loss in 10 quarters, during which time, we retired over $300 million in debt and doubled our cash postion.

If you think that those two track records or balance sheets are even in the same ballpark, you've been reading too much Holly.

You have yourself a nice one, huh?