Southwest airlines leveraged buyout issue

[SkiFishFly]

I heard they were going to increase debt and grow through the purchase of AirTran...

 

[Lear70]

Oh boy... PREPARE FOR THREAD DRIFT!!!

 

[Cobraair75drvr]

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.....

 

[johnsonrod]

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...

 

[SWA/FO]

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...

Yeah, then we can fly 10 hours a day.

 

[HalinTexas]

From today's Dallas Morning News.

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

Kinda makes you think who's the bigger better fish.

 

[johnsonrod]

How much cash on the books? LBO firms like to use a company's own cash to help pay down debt used in a buyout.

 

[AA717driver]

AMR wants to buy out SWA because their management is making AMR's look like a bunch of a$$holes. Uh, well, hummm... TC

 

[Benhuntn]

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.

 

[Schiphol]

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.

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.