Tuesday, June 17, 2008 6:41:15 PM
It looks like Continental used the buyout pressure to put the screws to XJT to get rid of the XJT sweetheart deal on fuel costs when cutting back on flights didn't do the trick...
The situation was postured as if XJT only had a choice of "this or that." "Either get taken over by SKYW or negotiate a new deal with CAL".
Now that the SKYW takeover is history, and XJT has signed a new deal with CAL... the market seems to assume "OK, that's it..."
While I don't think the takeover value of XJT was near being properly recognized in the SKYW offer, I don't think that SKYW being fended off necessarily means that there isn't any other combination potential for XJT that makes sense now. Fixing the deal with CAL was useful... but fixing that deal doesn't make XJT any LESS attractive in the current environment, but actually tends to make XJT far MORE interesting... BOTH as a function of the defined business, the ability to grow new business, and, particularly, for the benefit of XJT's superior financial situation combined with having forward looking profit potential in the CAL deal that the table doesn't reflect:
revenues /sh /qtrgrowth EPS Cash Cash/sh Total Debt
MESA
1.32B 44.299 -2.10% -3.186 90.86M 3.38 624.17M
XJT
1.72B 32.46 8.60% -2.12 139.63M 2.693 143.32M
ATSG
1.27B 21.381 32.60% 0.32 100.36M 1.587 558.81M
FRNTQ
1.33B 33.414 23.10% -0.79 170.43M 4.651 585.90M
As odd as it seems, it looks to me like there is a lot of interesting potential in a pairing of XJT and ATSG... the only two in the lot that have good potential for profitability and growth in the short term along with complimentary financial situations so that each would benefit the other now and in the future... but between FRNTQ or MESA there isn't that much of a contest... throw FRNTQ in the mix because in the current environment it has superior protection by virtue of already being bankrupt... or MESA... in a worst case, if some of the risk is taken out by bankruptcy or by converting debt to equity, only because it is real cheap. Some or all of this makes sense, in part, purely as a function of adding diversity in the major carrier risks, diversity in business segments, gates, and complimentary routes, while strengthening the financial situation... if FRNTQ and MESA debt risks can be contained.
The XJT management team was put behind the 8 ball in the last round... If there is "interest" in any thing of this sort going forward, they are more likely to be cooperative candidates, or a co-equal part of the acquisition team, than a stationary target...
JMHO... but I think there is still some more interesting stuff yet to come here.
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