Want to be a 20 yr fo? 15% roic!?!

[jonjuan]

>>>Now that they lost that crutch they have to actually compete to run an airline. Imagine that.<<<

No...it had nothing to do with fuel hedging. It's having to compete against the biggest crutch of all -- bankruptcy ...that allowed SWA's competitors to dump debt, totally screw their investors, creditors, and by shredding contracts and promised retirements -- employees.

And someone stupidly mentions that the playing field has been "leveled"? Yeah...bankruptcy and cutting your employees pay, benefits, and retirements in half does a real good job of that!! Nice way to operate and compete!!

However, the playing field is now leveled. Discounting the massive gains from the 2000s fuel hedging is a bit disingenuous. SWA used gains to grow throughout the 2000s.

 

[jonjuan]

Spot on Mach. The crutch as stated was smart business. Bankruptcy is a poor business plans crutch.

And a 20 year upgrade due to zero growth will be the result of swa's business plan going forward.

 

[redflyer65]

Alaska Air Group is basically a money printing press thanks to their monopoly route structure and lucrative code share deals, and even they can't come close to 15% ROIC. This goal is ridiculous. I'm settling in for a 20+ year upgrade. Growth is a long, long way off.

Plan for the worse, hope for the best. I can't disagree with you here.

 

[fam62c]

can't see how on the one hand they say they need 800's to reduce CASM, increase RASM, and on the other defer the planes you need to hit the target ROIC.

The SWA pyramid scheme is over.

Strange indeed, it saves cash but cash has a return of near zero percent. If a -800 can be used more profitably than the plane it replaces it may not return 15% but it will return more than cash. Buybacks and an increase in the dividend that still leaves the yield too small to attract dividend investors isn't going to move the share price; the company needs to move forward not run in place. The share price isn't going to go anywhere until SW can show investors that the company is going somewhere. If the CEO is trying to manage the share price it's not going to work, he needs to manage the airline first.

 

[scoreboardII]

True dat.

 

[BILL LUMBERG]

>>>Now that they lost that crutch they have to actually compete to run an airline. Imagine that.<<<

No...it had nothing to do with fuel hedging. It's having to compete against the biggest crutch of all -- bankruptcy ...that allowed SWA's competitors to dump debt, totally screw their investors, creditors, and by shredding contracts and promised retirements -- employees.

And someone stupidly mentions that the playing field has been "leveled"? Yeah...bankruptcy and cutting your employees pay, benefits, and retirements in half does a real good job of that!! Nice way to operate and compete!!

So it allows bottom feeders like SWA (in the 80s) to: not pay a pension, undercut wages, not pay for holding, give crappy perdiem rates, garbage workrules called "flexibility", and then have that formula compete against the airlines that had that for over 80 years??

It kills me when people on this board point at other startups and say they are the problem.

So the only way to undo that problem is court supervised restructuring. I hope you never have a management team hellbent to destroy the airline and your lifestyle just to prop up their payouts when they leave and go become the CEO of a paper company or something else. As employees, we need this safety valve......the only problem is, even the "new" management likes to hide behind the judges robe and squeeze even more.....ask an AA pilot.

 

[redflyer65]

Bill,

Bankruptcy was never meant to be a crutch for companies to gut contracts and agreements. But here we are with CEOs doing just that. Shareholders get zero, contract holders take a bath, labor takes a bath and the CEO just hits the reset button and starts over. Golden parachute and on to the next company. There is no accountablity for any of their actions.

 

[vikesfanIV]

Strange indeed, it saves cash but cash has a return of near zero percent. If a -800 can be used more profitably than the plane it replaces it may not return 15% but it will return more than cash. Buybacks and an increase in the dividend that still leaves the yield too small to attract dividend investors isn't going to move the share price; the company needs to move forward not run in place. The share price isn't going to go anywhere until SW can show investors that the company is going somewhere. If the CEO is trying to manage the share price it's not going to work, he needs to manage the airline first.

Why would Gary delay delivery of 30 800's? Simple in my book. Why spend 1 billion dollars on new airplanes if you can wait 4 years and then get an airplane (the Max) that is 10-12% more efficient than the 800. And have that added efficiency for the next 16 years. We have a fleet of almost 700 airplanes... delaying 30 deliveries for 4 years isn't going to cost the company that much in lost efficiency. It's a smart business decision.

 

[redflyer65]

Vikes is exactly right. Save 1 Billion dollars over 4 years, roll those planes into the Max version. Add six more seats to the exsisting 700s. Open Central and South America when able, throw in Hawaii/Alaska down the road.

I don't like pushing back deliveries from the pilot prospective, but the business end looks pretty solid.

 

[fam62c]

Why would Gary delay delivery of 30 800's? Simple in my book. Why spend 1 billion dollars on new airplanes if you can wait 4 years and then get an airplane (the Max) that is 10-12% more efficient than the 800. And have that added efficiency for the next 16 years. We have a fleet of almost 700 airplanes... delaying 30 deliveries for 4 years isn't going to cost the company that much in lost efficiency. It's a smart business decision.

I'll buy that if the MAX comes out on time and meets it's numbers.