David Rosenthal: evaluation

Transcript context

…Well, the other really interesting thing here is in just talking about the deal price, Alaska Airlines does not have $2.6 billion in cash to make this purchase. If I have my numbers right, as of November 2015 according to their earnings, they had $88 million in cash and $1.1 billion in marketable securities. So, I believe what happened here is in the bidding war with JetBlue, Alaska has incredibly clean books. They’re one of the few airlines that actually is investment grade debt. Very low debt load. Actually, investment grade debt, which for listeners who aren’t in the… come from the investment banking world basically means that the amount of debt that Alaska has is small enough relative to its earnings power that people think it’s very, very unlikely they’ll go bankrupt especially for an airline. No other airline is rated as highly, basically which means that people who don’t think there’s a good chance they’ll go bankrupt. Yeah. So, is there a chance then, that the way I sort of understand it is JetBlue sort of had to cry uncle because they didn’t have the amount of debt available to them.…

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