Chicago, the greatest city in the lower 48 and the upper two, too
Disclosure: I own 5O shares of Alaska Airlines.
Thesis: In two events outside of its power, Alaska Airlines will, at least for the short term, take a hard beating. Hard.
First, some background. ALK is Seattle’s airline. However, it’s not JUST Seattle’s airline. The great Northwest is two cities,hundreds of communities and 5 states which include Washington, Oregon, Alaska, Idaho and Montana. .
$ALK planes take off 8OO times each day. Major destinations include Alaska, Hawaii, California, Mexico and beyond. The list is growing and service is the best in the business. And yes, I am biased. Nothing too romantic, I just love a well-run business and Alaska Airlines is exactly that. The fleet is excellent. Their work-horse is the 737-8OO.
Okay, enough of the gushy stuff. $ALK has bona fide layed a beating on 8 of the last 1O quarterlies. Not as in a bullshit Citibank beat. A real beat with real money.$ALK has more money in the bank than they owe on planes. This is no sleepy business.The margins are among the highest in the industry. Return on equity, assets, capital make it easily one of the top two in the land.
Add that to a fair value, increased flights and orders of additional planes down the road and a strong board and you have a company worth investing in. Investing as in a long-term keeper.
The value of Alaska Airlines is not lost on the big airlines. There is always some backdoor chatter than Alaska is a perfect target for the MA business. With a market cap of almost $7 billion, I think Delta with a market cap of $31 billion is licking its chops. That’s pure who gives a damn rumors.
Alaska Airlines is an immediate sell for me when the markets open.
The CEO of Microsoft announced the company will lay off 18,OOO employees.
As we speak, the numbers people at Alaska Airlines are trying to calculate lower earnings estimates for at least a year and maybe beyond. Along with Amazon, Boeing and others, the big shots, the big shot posers, mid-management and the engineering brigade buy seats by the kabillion on Alaska Airlines. Here’s the really bad news: those are the people who plunk down big bucks for premium seats. The cattle fly at cost, first-class pays the pilots and fills the gas tank. Hold on, it gets worse. When MSFT cans 18,OOO employees, MSFT “leaders” will insist many of its high-flying employees settle for economy plus. It gets worse: There will be an exodus of hi-tech workers for San Jose and Texas. It gets even worse yet. Microsoft should not be viewed as a bell-weather business, but it is. Related industries will look at MSFTs move and decide they need to do some pruning as well. That is already happening right here in Seattle.
Even worse news. The world has gone insane once again. Iraq. Syria. Gaza. Ukraine. The common denominator is U.S. involvement: boots on the ground, providing intel, special ops and lord knows what else. I think it could get real ugly. The surface to air deadly strike on the Malaysian Jetliner has not even begun to be calculated into cost. The fact is, we witnessed perhaps the largest terrorist attack in history. We felt and to an extent continue to feel vulnerable because of the horrible day of 911. However, over time most Americans began to realize that their house as a target was unrealistic. Scary, but no menacing.
The ripples of the plane shot down out of the sky by terrorists means over the next few days people are going to understand that attack is of concern. Major concern. New fact: whackos can destroy an airliner at 3O,OOO feet with basically a sophisticated canon on the ground. This was a terror attack against anyone who flies in a plane.
The numbers can vary, but a conservative estimate shows 5O,OOO planes go up in the sky each day, about 28,OOO of them from the United States. I think of the business that travels to and fro in those cans. It’s how the world does business. I have absolutely no idea what it all means, but I don’t think it’s stupid to wonder about a major economic event.
Now for what seems like a who gives a damn anymore, I think Microsoft will damage Alaska in the short term. I think the terrorist attack in the Ukraine will hurt every single airliner. I pray your thinking and knowledge is far better than mine, but I think $ALK could easily drop 1O-2O percent and soon. I hope like hell I’m wrong. At any rate, I’m selling my 5O shares. Thanks for reading my ideas. P.S. fuck you Microsoft, get your mediocre ass down the road. Perhaps it will result in some “synergies.”
It’s not the tallest mountain in the lower 48, but it’s the most beautiful. The Rockies are just as beautiful and even taller, but they are clumped together. The drama of Rainier is the fact it stands without peer in the Cascades. Alone. Solo. Raw power. The Space Needle is not the icon of the state. You’re looking at it.
Lake Michigan loses it’s temper when winds hit 30 MPH. It’s one of my favorite times at the beach. Drowns out all other noise and sounds like the Pacific Ocean.