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  • Spirit Airlines Takes A Nosedive: Is It Warranted? [View article]
    Edward J. Roche, back to the original comment, there are no significant numbers of planes for anybody to do anything for at least five years. It isn't going to happen. The airline industry is plagued with dozens of possible disaster scenarios, all of which are real, but none probable and this one impossible in the near term. Is the FAA going to issue a part 121 certification to an airline that can compete? I don't think anyone with any real access to a fleet will get FAA certification anytime soon. And if you think the network airlines can relaunch a discounter like Song, Ted or Continental Express, it has been tried and failed.

    Your "egos" in the old airline industry are road kill today. Today's industry requires professional management and a profitable strategy. Financiers and financial institutions do their homework today.

    Your comment of small store vs WalMart fails to recognize that WalMart was the disruptor in the 1970s with few stores and only a regional focus. Sears was the big dog and tried to compete by being big and lost.

    Bigness as a sole strategy went away a long time ago when companies like American Airlines, General Motors and Sears all ultimately failed in their strategy to take over the world. Companies like Apple, Oracle and Google were all faced with giant industry leaders, but won by focusing on their strategy, ultimately unseating their big competitors.

    One last thing, if you believe that an airline like Delta with a 12% operating margin can effectively dislodge an airline like Spirit with a 22+% operating margin, I think you are mistaken. Spirit also has the advantage of a diverse network, meaning that if Delta decides to try to bump Spirit out of Atlanta, Spirit would merely choose other cities to serve out of Atlanta and compound Delta's losses. In today's environment, incurring losses to force competitors out of a market will get FTC/DOJ scrutiny.
    Dec 18, 2014. 11:41 AM | 1 Like Like |Link to Comment
  • Spirit Airlines Takes A Nosedive: Is It Warranted? [View article]
    Edward, your analogy is flawed. Comparing tech industries with no capital barriers to capital intensive industries where the assets (Planes) are not available makes no sense.

    If your analogy was well placed, you would be seeing other airlines move into Spirit's 22%+ operating profit space. We are not seeing that happen. The only probability is that Frontier, with 53 planes, will seek to duplicate Spirit's model because it was Indigo Partners that came up with the model for Spirit in the first place. Frontier has no planes on order and won't be able to get any real number of planes for 2-3 years when the 18 planes JetBlue rescheduled get sold to the highest bidder, which may be Spirit. There really isn't going to be anyone putting more than the 176 seats on an A320 to beat them at this game. By then Spirit will be at near 100 planes and impossible it catch until the 2020s. They already are swarming big airports with their value proposition and the large network carriers can't stop them. Whereas, JetBlue got run out of Atlanta by Delta 10 years ago, with its large operating margin, Spirit can sustain a more massive attack by Delta and survive. It is the same story for United in Denver and Houston, American in DFW and Chicago and even Southwest in Denver.

    There is a "moat" protecting Spirit from less profitable competition that would have to sustain massive losses to run them off, bigger that what it cost Delta to get rid of JetBlue.
    Dec 17, 2014. 05:45 PM | 2 Likes Like |Link to Comment
  • Is American Airlines Flying Too High Or Too Low? [View article]
    Hi Kai, The number came out of AALs post merger 10K. Just trying to get the best info, what was your source?

    Either way, the potential upside to AAL before ticket discounting is enormous!

    One point, AAL has the loss carry forwards from the old AMR legal entity. The NOL Carryforward per the 10K is 10.6 billion that they have to use by 2022. Accelerated earnings will use it up faster, making AAL fully taxable for federal tax purposes sooner. Future earnings will be impacted by the taxes. From an analytical standpoint, it will be necessary to consider after tax earnings in the near future.
    Dec 17, 2014. 05:09 PM | Likes Like |Link to Comment
  • Spirit Airlines Takes A Nosedive: Is It Warranted? [View article]
    edward j. roche: As I said, others can join the strategy, but there is an advantage to Spirit in being there first and building the brand. Merely adding tight seats to a Delta plane will not change the cost perceptions of that airline.
    Dec 17, 2014. 11:33 AM | Likes Like |Link to Comment
  • Spirit Airlines Takes A Nosedive: Is It Warranted? [View article]
    Spirit is a very volatile stock, with a rapid growth rate, so it it unreasonable to expect pricing stability.

    Growing at 15 planes next year is a big pill to swallow. So far, Spirit has maintained its operating margins, even as it grows. There is no indication thats its model is broken or failing. New routes take time to develop as customers don't find them on the first day. For a double digit growth company, 16X earnings is still a good deal.

    As for sustainability of the model, it has cornered the low cost, pay for service market. Other airlines can only merely join the strategy.
    Dec 17, 2014. 10:42 AM | Likes Like |Link to Comment
  • More noise about airfares [View news story]
    campwof, Schumer was trying to tax the oil companies instead! Whoever has the money he accuses of having too much! Lets see, Schumer is rich too? Maybe we should be taxing him more?
    Dec 16, 2014. 05:11 PM | Likes Like |Link to Comment
  • RadioShack: Heading Straight Towards Bankruptcy? [View article]
    captainmuggles, we have both commented on this before. The non-public data will indicate the viable stores and vulture capitalists will provide the cash to keep it going. The bankruptcy court has the responsibility of protecting the creditors. liquidation will only bring pennies on the dollar and the courts can cancel leases in a bankruptcy.
    Dec 16, 2014. 04:19 PM | Likes Like |Link to Comment
  • RadioShack: Heading Straight Towards Bankruptcy? [View article]
    nino91007, you have been talking up RSH for months. The company made it to the holidays and went in with only $40 million in the bank. In January, nothing has fundamentally changed and the company will be back to burning $10 million a week, down some $250 million in cash from a year ago. Simple math tells you that $40 million plus anything they banked at the end of the year is gonna go fast if they can't close the unprofitable stores, which they can't due to debt obligations.

    BTW, they still have insufficient margins to continue as a retailer.
    Dec 16, 2014. 02:34 PM | 1 Like Like |Link to Comment
  • Crocs on the move after CEO naming and upgrade [View news story]
    Lets remember that CROX generates a gross profit over 50% and a bottom line of about 4-5% of revenues. CROX is a bottom feeding company that is the first place people go-to in an economic downturn. Right now, as we live on the bubble, Nike kills Crocs, but that can change quickly.
    Dec 16, 2014. 12:59 PM | Likes Like |Link to Comment
  • RadioShack: Heading Straight Towards Bankruptcy? [View article]
    The company will survive in some form with their most profitable stores, but the shareholders will get killed.
    Dec 16, 2014. 12:55 PM | 1 Like Like |Link to Comment
  • More noise about airfares [View news story]
    Schumer is up for reelection in 2016. He just threw Obamacare under the bus and, like all Democrats, is trying to distance himself from these large, very public, failures. The fare issue is so poorly formed that it looks like a smokescreen to other issues he has through 2016. I hope we all remember his positions in the voting booth in 2016. With a diminishing Democrat control over the Northeast, Schumer may have viable competition.
    Dec 16, 2014. 11:40 AM | Likes Like |Link to Comment
  • More noise about airfares [View news story]
    Billweston, Following your recommendation would put a hammer and sickle logo on every plane along with the comfort and safety enjoyed on the airlines from the former Soviet countries. When airliner crashes in Russia, it does not even make headline news here.

    Do you really believe that the federal government would support first class seats on the planes unless it was for government officials? All seats would have to be the same class and many offered for free to lower income individuals while you subsidize their travel. Is that what you want?
    Dec 15, 2014. 04:57 PM | 5 Likes Like |Link to Comment
  • More noise about airfares [View news story]
    umuddafadda, The DOJ sued to prevent the American/USAirways merger and forced them to divest slots to the low cost airlines.
    Dec 15, 2014. 04:22 PM | 3 Likes Like |Link to Comment
  • More noise about airfares [View news story]
    The Airline Deregulation Act of 1978 took the government out of the business of setting fares. I hope Schumer knows that. There is no law to allow the government to re-regulate fares at this time. Unless there is evidence of collusion, which he has not presented, there is no crime to punish.

    If Schumer is concerned, he should push the FAA to approve Part 121 certifications for the new airlines applying. There are several start-ups waiting for their own certificate.

    This is a one day story when the DOJ and DOT tells Schumer that they do not have jurisdiction if there is no crime. Schumer has a history of going after profitable industries to get money. He twice proposed legislation to tax the oil industry for excess profits, which went nowhere. He likes to release these ideas on Sunday, so the Sunday morning news shows pick it up and put him on TV. NONE of the news shows picked up this story.
    Dec 15, 2014. 04:20 PM | 4 Likes Like |Link to Comment
  • Delta Air Lines: How New Efficient Aircraft Will Boost Results In The Future (Part 1) [View article]
    Is that the same refinery where Delta committed to buying 65,000 barrels a day when oil price per barrel was in the 90s? I think they blew that bet. If you run their pubic releases, they still make a lot of money, but the numbers indicate a multibillion dollar loss on that 5 year contract for North Dakota oil. It seems like they don't have the guts to tell the whole story or sink the refinery venture.
    Dec 14, 2014. 10:26 PM | 2 Likes Like |Link to Comment