Spirit Airlines: Crafting Value in the Merger Maze (+8%)
Spirit Airlines: Crafting Value in the Merger Maze (+8%)
When you are 84 and looking for cheap airline tickets.
Executive Summary
Merger denied low fares win? Spirit's survival in the industry's big league.
Strategic trade nets 7.9% ROE: Maneuvering masterfully in merger mayhem.
Recap Situation
The idea was a Christmas present; the reality involved a seasoned judge rejecting a merger between two companies that might have needed each other to compete against the industry’s big boys. Lower ticket costs for another year or two are more important than profitable airlines - and this judge went to Harvard.... maybe that explains it.
We had assigned a probability of 33% to this outcome. We take it with composure and dignity and thank MacroDozer for providing an excellent hedge if the worst-case scenario materializes - you're welcome.
Read the full story below for further details.
Why Now
The story has played out in the short run, and our options expire in 24 days, leaving little room for trade repair in case the price falls below our break-even point again. The implied volatility remains high. If we decide to…
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