kab60 Posted March 17, 2020 Share Posted March 17, 2020 Capex?... But they also have unencumbered inventory like engines they can finance (but like the planes it is not a good environment for that...) Link to comment Share on other sites More sharing options...
Spekulatius Posted March 17, 2020 Share Posted March 17, 2020 1.1B Current Liabilities 1.02B cash 2B line of credit available Fuel is 30% of opex (so a grounding would reduce that) 3.3B total opex 2019 27 planes owned outright Government bailout on the horizon What am I missing? I wonder what strings are attached to the credit line? They probably can last a year before becoming a zero. Link to comment Share on other sites More sharing options...
Castanza Posted March 17, 2020 Share Posted March 17, 2020 1.1B Current Liabilities 1.02B cash 2B line of credit available Fuel is 30% of opex (so a grounding would reduce that) 3.3B total opex 2019 27 planes owned outright Government bailout on the horizon What am I missing? I wonder what strings are attached to the credit line? They probably can last a year before becoming a zero. Also I can see some issues with their plane orders if Airbus doesn’t work with them. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 17, 2020 Share Posted March 17, 2020 1.1B Current Liabilities 1.02B cash 2B line of credit available Fuel is 30% of opex (so a grounding would reduce that) 3.3B total opex 2019 27 planes owned outright Government bailout on the horizon What am I missing? I wonder what strings are attached to the credit line? They probably can last a year before becoming a zero. Also I can see some issues with their plane orders if Airbus doesn’t work with them. Airbus will work with them as well as with other airlines. It’s going to be some give and take. Link to comment Share on other sites More sharing options...
Peregrine Posted March 17, 2020 Share Posted March 17, 2020 Airbus can’t even deliver the planes if they wanted to with the current travel restrictions in place. Hard to see many planes being delivered at all this year. Link to comment Share on other sites More sharing options...
Edward Posted March 17, 2020 Share Posted March 17, 2020 2B line of credit available What line of credit? They do not have any. They have about 1.1B$ in cash and unencumbered assets around 700M$. Which in % terms of operating expenses is probably better liquidity than any other US airline. Deliveries are a bit concerning in this environment, but hey - maybe they will retire the 319 airbuses sooner. Link to comment Share on other sites More sharing options...
Castanza Posted March 17, 2020 Share Posted March 17, 2020 2B line of credit available What line of credit? They do not have any. They have about 1.1B$ in cash and unencumbered assets around 700M$. Which in % terms of operating expenses is probably better liquidity than any other US airline. Deliveries are a bit concerning in this environment, but hey - maybe they will retire the 319 airbuses sooner. You're correct, should have looked into this stat posted on twitter more. This guy said line of credit when he should have said shareholder equity...(just checked the 10k) Link to comment Share on other sites More sharing options...
Edward Posted March 17, 2020 Share Posted March 17, 2020 The equity is made of planes which is of no use at the moment. Having liquidity is king. What is nice here is the business model. Lowest cost (CASM) in the industry, and the gap from the competition should grow over time. This is why they can grow fast while the rest are growing slowly, while keeping decent margins. ROE in normal times is over 20%. They also have 85% domestic only flights if I remember correctly. Better than having your flights to the far east and Europe shut down. Link to comment Share on other sites More sharing options...
gjangal Posted March 17, 2020 Share Posted March 17, 2020 No analysis to add , but a 75% drop on my purchase price in 3 weeks ( which I thought was low) makes me want to puke when I see this name Link to comment Share on other sites More sharing options...
kab60 Posted May 7, 2020 Share Posted May 7, 2020 I recently sold 1/3, put 1/3 into Aercap and kept the rest, but then Monday I completely blew out of Spirit and Aercap after Buffett sold - which was already telegraphed. I was a fool for not taking advantage of this thing moving to 15 twice and only selling 1/3. My analysis was pretty simple, I had done it before, but I sucked my thump instead of acting fast. Because the facts have changed here. Even if this thing muddles through without an equity raise, I don't see it trading above 30/share for a long time. And during the last couple of weeks there has been plenty of things for sale with at least 100 pct. upside, so it seems like a gift to be able to get out at 15 and only take a 50 pct. loss. This has been a lesson in that facts actually do change sometimes, and that things aren't cheap just because they go from 45 to 10 in four weeks. Edit: Announced an equity raise: https://seekingalpha.com/news/3570866-spirit-airlines-announces-offering-of-common-stock-and-convertible-senior-notes I still like Spirit, very much so, but operating leverage and financial leverage combined can be tough. Perhaps I'll be back in when things settle down a little, and they sign pandemic insurance with Berkshire. :) Link to comment Share on other sites More sharing options...
kab60 Posted May 8, 2020 Share Posted May 8, 2020 Did everyone else give up as well? CC wasn't all that dire. They fly a lot out of Florida. Their customers and segment should hold up better than corporate customers. But equity raise was badly timed, and they'll come out of this with a lot more debt - but also the possibility of levered equity retuns. Anyone thinks this leads to more consolidation? Link to comment Share on other sites More sharing options...
Castanza Posted May 8, 2020 Share Posted May 8, 2020 Did everyone else give up as well? CC wasn't all that dire. They fly a lot out of Florida. Their customers and segment should hold up better than corporate customers. But equity raise was badly timed, and they'll come out of this with a lot more debt - but also the possibility of levered equity retuns. Anyone thinks this leads to more consolidation? I sold out of my equity when it hit 15 as well and took about a 43% loss on it. I still have a few leaps with strikes of $25, $27.5 and $30 that I will let ride. Who knows....it's a very small position for myself so I haven't followed it much since I sold out of my equity. Hopefully I'll wake up in two years and see Spirit is trading at 30+. Link to comment Share on other sites More sharing options...
mwtorock Posted May 8, 2020 Share Posted May 8, 2020 raising equity at absolute bottom pricing smells so bad... Link to comment Share on other sites More sharing options...
kab60 Posted May 8, 2020 Share Posted May 8, 2020 raising equity at absolute bottom pricing smells so bad... Yep. They had two shots at 15. That and a new corporate HQ that costs 200m is bad timing. Always sell when corporates build a new HQ (because that is a real pandemic indicator) Link to comment Share on other sites More sharing options...
zhengmit Posted May 8, 2020 Share Posted May 8, 2020 What did you guys buy after selling SAVE? Link to comment Share on other sites More sharing options...
Castanza Posted May 8, 2020 Share Posted May 8, 2020 What did you guys buy after selling SAVE? Nothing airline related Link to comment Share on other sites More sharing options...
Castanza Posted June 4, 2020 Share Posted June 4, 2020 This price action is insane. Some of my options are now ITM ;D :o Link to comment Share on other sites More sharing options...
rkbabang Posted June 4, 2020 Share Posted June 4, 2020 This price action is insane. Some of my options are now ITM ;D :o I have $30 strike and $45 strike LEAPs and both are in the money (21% and 33% respectively). I'm thinking of selling them today. I'm still at a 14% loss on my common. Link to comment Share on other sites More sharing options...
mwtorock Posted June 4, 2020 Share Posted June 4, 2020 Feels like a short squeeze across all airlines, aero OEMs and suppliers for a few days now. It seems like the market is saying the expectation has changed, eg. no second wave in the fall and air travel will come back faster than previous expectations. Maybe the market is right this time, or maybe it is just as wrong as two months ago. Link to comment Share on other sites More sharing options...
kab60 Posted June 4, 2020 Share Posted June 4, 2020 Grats to you Guys for holding on. Well played. I almost bottom-ticked my sales of 2/3 of my position. Me and Warren suck, even though I still think it was the right decision. Can't really square the current valuation with the state of the balance sheet, equity raise etc. and risk-reward elsewhere. Link to comment Share on other sites More sharing options...
Spekulatius Posted June 5, 2020 Share Posted June 5, 2020 I think we are getting to the point in this bull market where pigs fly, quite literally. Link to comment Share on other sites More sharing options...
valueinvestor Posted June 5, 2020 Share Posted June 5, 2020 I think we are getting to the point in this bull market where pigs fly, quite literally. +1 Link to comment Share on other sites More sharing options...
Castanza Posted June 5, 2020 Share Posted June 5, 2020 I sold the majority of my options for profit to offset my loss on the common. I got pretty lucky on this one and was able to offset my common loss and keep a few leaps on "house money". This environment has certainly ruined my appetite for options moving forward. I would much rather hold common moving forward for the majority of equities I'm interested in. Plus, that ship has sailed for much of the market at this point unless we see another leg down. Link to comment Share on other sites More sharing options...
gfp Posted June 5, 2020 Share Posted June 5, 2020 I don't know what the case is on all the airlines, but it is extremely difficult to short AAL at the moment. One minute you can find shares to short, others not. Interesting times! $5 Billion to $10 Billion in two days - go get 'em Link to comment Share on other sites More sharing options...
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