Yup and one of reasons DOJ could block merger. Also correct per va has a LONG way down if merger called off completely, down as far as to 25$ share. I would not be making this bet if only potential 20% downside...
Going for the home run or strike out uncle , no guts no glory...betting on an irrational DOJ Of course DOJ will likely get rational just in time to mess things up. My best guess is we should know within next month either way hopefully before 9-16 options expire. DOJ is at a minimum taking a very hard look at the merger
IMO DOJ will be more subjective than objective in reaching their decision which is the case you are making and I agree with. Remember the DOJ took a very hard line with the lcc/amr merger and only backed off after intense union/political pressure. That said, DOJ will have to come up with some odd arguments to justify stopping the merger same DOJ did approve lcc/amr merger
IMO the only way this DOJ will ok this merger as is would be if they feel it would increase competition between the major airlines...I really can't answer that question other than to say consolidation as a rule reduces competition . I really feel this DOJ has a big time hard on for the airline industry and will stick it to the airlines any chance they get.
Odds are a deal will be cut between DOJ and Alk ...any news or rumors that DOJ making big concession demands could send va down ...doesn't have to only be DOJ suing to stop the merger. Even a 5$ PPS drop would be quite profitable...my bet is strongly informed by my experience with DOJ very unexpectantly suing to stop lcc/arm merger in August 2013. Just hope DOJ doesn't have a soft spot for the smaller airlines vs legacies
Yup, market definitely thinks the deal is going thru...hope my va short bet works out better than Avh which reported a solid 2q but not great and no news of buyout/ partnerships...
September and December 50s and 55s and little March September cheaper but good odds will expire before DOJ decision. Have had hard time getting orders filled without paying up on price per low open interest
I'm not betting on the Alk cold feet argument , Alk has stated they will work to address any DOJ concerns and IMO getting rid of va and gaining slots etc justifies the price Of course if DOJ makes huge demands that negate benefits Alk would derive from the merger than Alk could call off merger which would see the big pps drop to 25-35$
DOJ has it in for the airlines and IMO 50% odds will sue to stop which will result in va pps dropping even if merger eventually goes thru. Alk overpaid so a lot of downside in va, Alk just trying to get rid of va which does not fit well with Alk which DOJ likely realizes. Bottom line is IMO DOJ will argue merger will reduce competition in itself and lead to further consolidation by lccs....yes, line in sand argument I'm hoping decision comes soon as I bought some September puts a while back and December more recently. Also have shorted shares
Don't expect pps to drop to fmv of 25-35 just because DOJ sues , most suits are settled like lcc/amr. Likely scenario is terms of merger will be modified in which case pps may not drop at all ALK has stated they will work with DOJ to satisfy their concerns. DOJ will have to take very hard line for merger not to happen.
I stopped trying to figure out oil, got burned in 1h 2015 expected oil to drop, it did but not until August and that was too late. If economies stay stable my bet is oil will rise this winter especially if cold winter ..I only hold a third of what had in Aal and it is hedged down to 32-33 and break even at 40$. IMO glass is now half full with Aal and I will look to get back in but only on a market correction.
Not clear to me if possibility of strategic actions before any de stacking. At times the CEO makes it sound like possible before de stacking. Not clear to me for example why glaic could not be sold now with part of proceeds used to capitalize LTC/GLIC
PPS can advance significantly before LTC is isolated if a positive strategic move is made such as an asset sale...CEO has been yapping about strategic options forever so overdue to actually do something. Look at CHK which has about same revs as GNW and 9b in debt , stock is up from low of 1.60 to 6.20 because of asset sales and debt reductions
IMO and King Fish VA worth only 25$ Without merger. I'm short VA and bought some puts. Best case scenario is ALK calls off merger due to DOJ demands...should have DOJ decision by October maybe sooner. Baker very skeptical that merger will be approved as I am. DOJ will approve IMO only if feel merger will result in more comp for big four airlines.