Seeking Alpha


Send Message
View as an RSS Feed
View markcc's Comments BY TICKER:

Latest  |  Highest rated
  • A Look At Boeing's Commercial Orders And Deliveries In October [View article]
    Dhierin, I appreciate what you are doing. My comment was directed at making sure investors here were not whipsawed by short period data. Aerospace orders of all types are not like McDonalds hamburgers and the month to month variability can be massive and a distraction to how well or badly the manufacturing companies are really doing.
    Nov 29, 2015. 03:14 PM | 1 Like Like |Link to Comment
  • Cross-Examining The Bulls' Spirit Airlines Thesis [View article]
    Merkin1, let me embellish your statement. A major part of Spirit's model is high aircraft utilization, higher than the network carriers that have to build in a larger amount of ground time of hub connections. None of the network carriers would ever do that because passengers would miss too many connections.
    Nov 29, 2015. 12:22 PM | Likes Like |Link to Comment
  • Cross-Examining The Bulls' Spirit Airlines Thesis [View article]

    Huh? Baldanza being on CNBC and talking about the fundamentals is bad?

    Parker has proven unable to get Spirit out of DFW, while Spirit continues to load planes at 87.2%. Nightmare? I think it is actually the other way around. Picture Spirit that continues to grow and double in the next 8 years, what is American going to do then? If you look at the impact of EasyJet and Ryanair in Europe, Lufthansa employees have taken to strikes to protect their compensation and benefits as Lufthansa institutes cost cutting. Lufthansa just lost a $4,000 run from me due to strikes. Is American going down the same path? We cant say, but Parker has no real strategy yet.
    Nov 29, 2015. 12:06 PM | 2 Likes Like |Link to Comment
  • Cross-Examining The Bulls' Spirit Airlines Thesis [View article]
    Courage & Conviction Investing, your comment against me "I don't agree with anything you wrote" just about sums up your position. You would rather throw out the facts I presented and substitute your opinion in order to counter Mr. Tilson. You have gone personal.

    You call yourself "Courage and Conviction Investing" you have worked in the investing industry and you post continually, so it is reasonable that people consider you an analyst.

    You make specious comments that "no other airline would buy (Spirit)". Where do you get that information? Wow! What a leap beyond the profitability and inability of another airline to compete, which creates a tremendous reason for somebody to buy them. If American, or other big 4 airline, could, it would come up with $4 billion to buy Spirit today, as American will lose more than $4 billion in revenue due to the price pressures put on it by Spirit.

    You make another unsupported statement that the reason nobody would buy them is that their business model "business model that doesn't compliment any other airline." A buyout does not have to come from a complementary airline nor do the operations have to be integrated into the buyer. Just because the big mergers require synergies to make them work, another airline controlling the expansion of Spirit could divert the competition toward other competitors and away from the acquiring airline's existing routes. Please think more globally. An acquisition can come from a non-airline.

    Your don't present a load factor number for Spirit but choose to attack them with an artificial bar of 90%. While the industry has a load factor in the mid-80s, Spirit exceeds the industry averages with a YTD load factor of 87.2% Your criticism is just wrong as Spirit beats the competition. The high load factor comes as Spirit is expanding a t double digit rates, a relationship that you don't usually see in the industry because it normally takes time to develop routes.

    I am not here to defend Mr. Tilson, but you say that "Europe is a very different market BTW". Different in what? You never explain, just sling attacks on Spirit by saying that? Unprofessional.

    Your comment about Myrtle Beach is unintelligible from an investors perspective. One route does not make an airline. You state that your parents have flown Spirit 40 times! Since there are other options, Isn't that an indication of repeat business? LOL Obviously, the business offering Spirit has meets their needs better than any other airline.

    Your #7 makes no sense, as pundits on here are one sided in their attacks that have definitely had an impact on Spirit's stock performance. It is like throwing mud against a wall then telling the owner of the wall that the wall is dirty. The current decline is due to the excessive punditry against Spirit. Pundits like you merely dismiss the fundamentals of this company in a big talk down that continually cites the price of the stock.

    A stock with the profitability and growth rate of Spirit deserves a much higher price than the current price. You failed to mention that the stock has already moved from $32 to $36 since you posted, so choosing a new higher $36 price is just a way you can try to continue to present a position of superiority.

    Please read the criticisms of others on here of your "analysis".
    Nov 29, 2015. 11:59 AM | 1 Like Like |Link to Comment
  • Cross-Examining The Bulls' Spirit Airlines Thesis [View article]
    Courage, none of your criticism has countered the fact that Spirit had highest operating margins, highest growth and high load factors that make airlines successful. Your analysis always compares Spirit to the full service airlines, not low cost transportation alternatives, which provide a far lower satisfaction than Spirit. Another poster on SA compared Spirit to Greyhound, a comparison that Spirit wins hands down.

    You are not an airline analyst, because you accuse Spirit for not owning aircraft. A real analyst recognizes that leasing is just a form of financing and does not have much to do with the success of the airline.

    You ask what a "potential acquirer would be buying." The question of an airline with an operating margin in the mid 20s, growing at 10-20% and selling at 8-9x earnings is so far from reality that I, like other posters to this thread, have to question your motives.

    Somehow you must have cut the business strategy course in college where they discussed market share and missed the part where they discussed defining the relevant market. Let me repeat that the only relevant market that airlines compete on is the two cities that they connect. Scale has never been an advantage to any airline, period. Otherwise American would have taken over the world 20 years ago. It can even be argued that scale is a disadvantage.

    Niche? Is that even relevant? If they fill 85% of their seats, is that criticism relevant. There are many big 3 markets to take. If they moved to markets where they beat the incumbent airline by 10 or more operating profit points, does it mean anything that their competitor is a big 3? No. The big 3 cannot compete.

    You say their growth is unsustainable, but never present facts why. There is absolutely no evidence of your baseless statement.

    As for the stock decline, there are a large number of pundits taking Spirit stock down, but none have presented any data that supports that position.

    I am tiring of your baseless criticisms and wish that you would be honest enough to agree with the facts that I and others have presented in opposition to your baseless observations.
    Nov 28, 2015. 10:09 PM | 3 Likes Like |Link to Comment
  • A Look At Boeing's Commercial Orders And Deliveries In October [View article]
    I don't see the relevance of one month of orders or one month of deliveries. Having worked in the aerospace industry, such a low variance can be related to supplier lateness, weather or just the number of work days in a month (such as Easter or Thanksgiving variability).

    Year to date is more relevant. This is still a binary industry, you either get the order for 50 planes or you don't. One day acceleration/delay puts it into the next or previous month.
    Nov 28, 2015. 03:53 PM | Likes Like |Link to Comment
  • Cross-Examining The Bulls' Spirit Airlines Thesis [View article]
    MOTU, I like your Greyhound analogy, it is more relevant than comparisons to full service airlines (whatever that is anymore). If you gave me a ticket for 1,000 miles on Spirit or 1,000 miles on Greyhound, Spirit wins. The people knocking customer service for this profitable company don't see the real competition.

    One more note, it is insane for the big 3 to "match" Spirit since they would simply give away revenue. Insanity is close to suicide too. As Spirit continues to add to its rapidly growing fleet, even Southwest will be threatened.
    Nov 28, 2015. 03:12 PM | 1 Like Like |Link to Comment
  • Cross-Examining The Bulls' Spirit Airlines Thesis [View article]
    Growth was fleeting? Read the growth stats! There is nothing fleeting about their airplane order rate, load factor or profitability. All you have is your faulty opinion that people won't get on planes at odd times of the day to save money. Please post fact based comments in the future, not just opinions that are opposite to the facts!
    Nov 28, 2015. 12:07 PM | 1 Like Like |Link to Comment
  • Cross-Examining The Bulls' Spirit Airlines Thesis [View article]
    You, and other pundits on here pull the peak number as some sort of relevant number for most Spirit investors. The stock market fluctuates for reasons including the current gang-up by the pundits that missed the run-up and want to talk the price down. Remember that Spirit went public at near $11 a share so buyers in Spirit are winners, not losers. I could cite that the stock went to $32 and is now $36, but that is not relevant to the analysis of the stock.

    Pundits like to cite low satisfaction scores, but those scores come with high profitability and high load factors. American cannot turn its airline into Spirit's service levels because the results would be devastating to American.

    Ones analysis should not be based on whether they have a profit or loss, but the argument they present. Nothing you have presented backs you position that "Spirit has no competitive advantage" Let me restate that they continue to be the highest operating profit daily scheduled airline with the cleanest balance sheet in the industry.

    What makes Spirit a long term buy is that it has the largest margins and its competitors would have to price themselves at below their own cost in order to effectively compete on price. Spirit will continue to take market share from the big 3.

    You have not addressed the issue that the current stock price makes Spirit is a buyout target at a nice premium over the current stock price. There are several other airlines getting boxed in with their current strategies and buying Spirit would open up new growth opportunities.
    Nov 27, 2015. 10:59 AM | 5 Likes Like |Link to Comment
  • Cross-Examining The Bulls' Spirit Airlines Thesis [View article]
    Courage and conviction fundamentally does not understand the airline industry. Using terms like "whoopty do" is just plain unprofessional.

    The points the author makes relies heavily on market share data that means nothing because airlines don't compete on size, they compete on routes and prices. With Spirits growth rate, highest operating margins of any scheduled airline, and full planes are dismissed by the author. Factors like lowered satisfaction due to tight seating and ancillary fees that are sustainable, are seen as a negative, not a positive for shareholders.

    As for consensus estimates, so much depends on the source, with a high degree of variability just based on the source and quality of the analysts surveyed, I can find sources all over the board on this issue. Nevertheless, most support the fact that Spirit is selling at less than 10x earnings.

    The author threw out stats against southwest, but left out the $200 change fees charged by American and United. Also, he failed to mention that Southwest does not let you standby for an earlier flight without an up charge to full fare. This is a big deal for the business traveler.

    The author hit Spirit on leasing vs buying planes without the mention that Spirit has the cleanest balance sheet of any airline. It has the highest operating margins and cannot be forced out of a market by a big 4 airline, so it merely takes away business.

    As for fuel, all airlines gain and lose from fuel fluctuation. This years profit will pay for most of the outright purchase of new planes. This cleanest balance sheet position will continue into the future.

    In short, the article is a hack job where the author does not understand the industry, especially when a new airline expands fast and it takes time to fill planes and routes.

    The author has not provided a shred of information which provides insight on why Spirit would not meet future growth rates.

    I look for the usual bumps that a high growth company has, but no killer issue impacting Spirit at this time.
    Nov 27, 2015. 08:28 AM | 13 Likes Like |Link to Comment
  • Travel warning taking a toll on airline, hotel, and amusement park sectors [View news story]
    The warning will not stop me from getting on any domestic or European flight. I am not going to stop eating out and am making no changes to anything I am buying. The effect of this is warning is close to zero, so any drop is a buying opportunity.
    Nov 24, 2015. 02:57 PM | 1 Like Like |Link to Comment
  • 2 Reasons Why Delta Is Building A Global Airline Empire [View article]
    sheepdip, Warren Buffett missed the run-up in airlines with basically the same comment!
    Nov 23, 2015. 05:40 PM | Likes Like |Link to Comment
  • 2 Reasons Why Delta Is Building A Global Airline Empire [View article]
    Good luck shorting a stock that is going to make $5.73 in 2016 or about 8x earnings. Do you expect it to go to 7 or 6 times earnings? I suggest you rethink the fundamentals before forecasting such a decline!
    Nov 23, 2015. 11:31 AM | 1 Like Like |Link to Comment
  • Why It's Time To Buy United Continental Holdings [View article]
    It is hard to compare JetBlue and United. JetBlue, under Barger, insisted on no bag fees and lots of seat space. Unfortunately, that yielded an airline with a 7% operating margin, which was not strategically sustainable against airlines that had margins, at that time, of 10-15%. Barger had to go to make way for a few hundred million dollars of profit improvements at the expense of customer comfort and expense. Now the margin is 16.6% vs United's 13.3%. JetBlue is now adding seats that will be finished by the end of 2016, so look for more improvement by then.

    United is a different story, with seating already squeezed and bag fees in place for years, the upside is not the same. The biggest upside comes from management fixing all the problems they have and finally integrating the Continental operations. I spoke to a flight attendant on an old United/Continental flight this week and they still run two airlines!

    A few more points of margin? Probably. Following JetBlue's rise? Unlikely.
    Nov 20, 2015. 05:58 PM | 1 Like Like |Link to Comment
  • High-Flying Delta Will Continue To Soar [View article]
    Jack Rice, Unsupported? Tell my kids that their frequent flyer accounts with less than one trip in miles in them keep them loyal to the airline. With lower mile collection rates, expirations at 18 months, they will have many miles expire anyway. Unless they get jobs that travel, they are likely never to hook into any single airline. Like me, I think you are surrounded by other frequent flyers, so the impact of diminishing FF benefits seems different to you.

    According to American Airlines president J. Scott Kirby, "We have that 50% of customers who are very infrequent travelers who fly us once per year – 50% of our revenue who fly us once per year or less, for whom air travel is largely a commodity, and I wish it wasn't that way, but it is. And you can see it. I'll give you some more stats in a minute about how much Spirit and Frontier and others have grown and how successful they can be in getting those customers to move off of us if we don't match their prices. And so, 50% of our customers are up for grabs. We have to compete for them. We can't just walk away from that size of the business."

    This lack of loyalty is impacts cars, hotels and the airlines and is why airlines are focusing more on price. It will not take too many zeroed accounts before most people get too frustrated of collecting FF miles and switch to other types of credit card incentive programs. Since credit card purchased miles are billions of dollars of revenue to the airlines, this is a big deal.
    Nov 20, 2015. 04:07 PM | Likes Like |Link to Comment