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US Airways Group, Inc. Message Board

  • nostracumass nostracumass Mar 3, 2013 9:58 PM Flag

    Valuation; I keep coming back to comparing fully diluted LCC vs DAL & UAL

    And what I get is this; UAL mkt cap is $9.11B, DAL $12.54B, LCC/AMR @ $13.20ish is $10B fully diluted @ 209,000,000 share count for LCC. So, you have to ask yourself the following; is this combination better or worse than the previous two?? The street is quickly adjusting UAL and DAL valuations and telling us "no". However, I think that all of the legacies are very cheap even at these much improved levels in share prices, so the downside in LCC I keep coming back to would be around $11.50, the upside perhaps as high as $20 or more in the next 12-18 months barring in catastrophic black swan.

    What I'm dying to know is how much debt will remain @ the combined entity. I believe I read somewhere that WITH pension liabilty it is around $15B vs $38B for DAL (DAL has an insane pension liability). So there is a real possibility that the new company may be substantially undervalued.

    The shorting that is going on NOW after full dilution is somewhat confounding. I can't imagine why a fixed income holder would short a highly levered stock like this against a bond holding, especially given the low P/E. I am thinking a MAJOR spike could occur at anytime. How about, tomorrow :) We have a presentation in the morning, no?