David Rosenthal: evaluation

Transcript context

…Yeah. I think we’ve expressed our opinions laced in a bunch of comments throughout this. For me, I think the value has inflated both by the bidding war and by the fact that they bought something that had brand built into the market cap when they’re not necessarily a leverage and in fact have announced they’re not going to leverage that brand. But, I think they needed to. I don’t think they had a lot of options and I think they both picked the time right when this was an available purchase. They put themselves in a really good position to make that purchase – I’m probably the wrong person to talk about this – but by putting their books in a great position over the last 5 years and being really intentional about being an investment grade or having investment grade credit. I think that JetBlue didn’t prioritize that as much and neither did any of the smaller airlines and in a world where they need to consolidate, they had put themselves in the position where they’re able to do so. So, I’ll give it a B minus. Yup. It’s hard to separate out just, at least for me, coming from the tech industry this sort of shock looking at the terrible economics of the airline industry as a whole in dynamics versus the actual quality of decision-making in this acquisition. So I think a lot of what you said, I agree with. But I’m going to go lower. I’m going to go C minus because what you said is right, but they paid so much money. They paid so much money! I don’t think it’s public and I don’t know that anybody except the executives involved know what Alaska’s initial bid for Virgin was, but it got bid up so many times and that’s a large price for something that your pilots can’t fly. Can an airline make a good purchase?…

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