Recieved this this morning:
Southwest could buy Frontier Airlines from Republic cheaper than in 2009 (AMR, LUV & RJET)
Southwest Airlines buys cheap and Frontier will be Bargain
By Jonathan Yates
Published: November 11, 2011 4:57:50 AM PST
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StockHQ:
RJET
$4.03+$0.08+2.03%
AMR
$2.27+$0.09+4.13%
LUV
$8.21+$0.10+1.23%
Southwest Airlines (NYSE: LUV) could be the big winner as Frontier Airlines is put on the auction bloc by Republic Airways Holdings (NASDAQ: RJET) as it seeks to avoid the likely fate of Chapter 11 for American Airlines (NYSE: AMR).
Ironically, Republic Airways bested Southwest Airlines for Frontier Airlines in 2009, after it filed for bankruptcy. But higher fuel costs and competition from Southwest AIrlines now has Republic Airways looking to sell Frontier Airlines. The announcement earilier this week made Republic Airways a top gainer, definitely an unusual position for the company as the stock has been decimated in 2011. Republic Airways is now at $3.95, down from a year high of $8.50.
It was competition from Southwest Airlines that mortally wounded Frontier Airlines at its Denver hub. Now the acquisiton of Frontier Airlines would greatly augment the presence of Southwest Airlines at Denver. Buying Frontier also does away with a major competitor of Southwest Airlines in the discount sector of the market.
Frontier Airlines has appeal to Southwest Airlines in many other areas. First, and foremost, it will be a cheap acquisition. As detailed in previous articles on www.smallcapnetwork.com, "Southwest AIrlines Stock is Ascending through Shrewd Acquisitions, like Warren Buffett and Berkshire Hathaway," Southwest Airlines buys low. It also brings many A-320s to Southwest Airlines. Before recently buying Airtran, Southwest Airlines only flew Boeing-737s.
It has been a difficult year for the airlines industry. Lower passenger traffic from The Great Recession and higher fuel costs have been very damaging. Some analysts expect to see American Airlines file for bankruptcy in early 2012 as the stock now is at $2.18 a share, down from a year high of $8.89. . But the new year could see another acquistion for Southwest Airlines, again done at a bargain price.