Today, DeNardi writes,Currently, Southwest's business model is entirely dependent upon the [737]MAX returning and Boeing resuming/ramping production. Southwest is arguably the US airline most affected by the continuing Boeing 737 MAX disaster. JetBlue Airways this week made its own bid, of $3.6 billion, for Spirit, which said late Thursday night that it would consider the proposal. Every day, new opportunities emerge around M&A and we help professionals of all types comb through transactions, investors, and corporate acquirers via an easy-to-use web database that is accessible to anyone. With its recent Virgin America purchase, Alaska Airlines is now the fifth largest carrier in the country. Those three airlines have a 3% market share, maybe a little more now since they are so domestic. Mr. Denis said regulators examining airline deals had historically focused on the impact of combining large, legacy airlines those in business for decades. . Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, and reddit. One obvious stumbling block: Southwest has exclusively operated Boeing 737 aircraft over its 50-year history, while JetBlue is essentially an all-Airbus (plus Embraer regional jets) airline. Compare the cost in points or miles to cash, and see which option is best. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Adam Levine-Weinberg owns shares of Hawaiian Holdings, and The Boeing Company and is long January 2017 $17 calls on JetBlue Airways. Mergers in the airline industry have led to higher prices for consumers and lower wages for workers, and the Justice Department needs to closely scrutinize these proposed deals and challenge them if necessary, she said in a statement to The New York Times this week, echoing a letter she and other lawmakers sent to regulators last month about the Frontier-Spirit deal. And the Biden administration is uniquely focused on the impact of corporate deals on economic inequality by, for example, raising fares and suppressing wages. It makes more . It is against the APC Forum Rules to advocate any labor action which is not authorized by the RLA/NMB. Agree Mike except for the quickly part. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. U.S. They want to know how a proposed merger affects travelers, including whether the combined company will be able to significantly raise fares on routes where the two companies previously competed head-to-head. But one has to wonder if there are any logical merger targets left for JetBlue now that VA is off the market. The Big Four in the airline industry long known as Delta (DAL), American Airlines (AAL), United Airlines (UAL) and Southwest Airlines (LUV) may look a little different at some point this year as executives pull the trigger on mergers to consolidate costs as the slog from the depths of the pandemic stretches on. Frontier flys many of the same routes and is the largest direct competitor in the very important DEN market. Airline merger rumors buzzing in 2021 With business airline travel down 85 percent in 2020, airlines across the board. I dont think these companies individually would have made it.. It operated 194 A320 family jets and 60 Embraer 190s at the time. Receive 1 Free Night Award every year after your Card renewal month. The company and powers that employs & also has a very tight/strict requirements guidelines with customer service. reduce the dependence on Boeing). There were significant differences in those areas in both cases. The Marriott Bonvoy Business Amex is a stacked card with a rewards rate that will help you earn bonus points on everyday and business-related purchases. The last round of consolidation really was about balance sheets, he said. A Southwest-JetBlue tie up is unlikely in the short term. However, there would be a number of issues bringing in JetBlue employees including union status, seniority and pay structure. . Also Indigo is privately held and therefore a merger could happen far more quickly. Could JetBlue be an answer to Southwests problems? It has also divested 1 asset. Integrating another airline via acquisition can be time-consuming and difficult. The Justice Department is seeking to nullify an alliance between JetBlue and American in the Northeast. United States, This all-737 strategy is a big barrier to any further merger attempts at Southwest. We built Mergr to save people the arduous and time-consuming process of tracking when companies are bought, sold, and who currently owns them. The Southwest Changes and Cancellations Hub is where you will find answers and information on refunds, overbooking, and flight credits. JetBlue has guaranteed Spirit a reverse breakup fee if its deal is called off over antitrust concerns. The theory goes something like this. 2009 - Merged with TACA Airlines. From a network perspective, though, Alaska doesnt make a ton of sense since Southwest is pretty well-established on the West Coast and probably does not have a lot of interest in operating Alaskas large EAS intra-Alaska routes. Now a bit player like Sun Country could be a different deal. Southwest Airlines (LUV) Q1 2023 Earnings Call Transcript, Southwest Airlines (LUV) Q4 2022 Earnings Call Transcript, Why Southwest Airlines Stock Is Falling Today, Why Southwest Airlines Stock Fell in December, Why Southwest Airlines Is Losing Altitude Today, U.S. Money Supply Is Doing Something It Hasn't Done in 90 Years, and It May Signal a Big Move for Stocks, Why I Refuse to Chase the Maximum Social Security Benefit, Social Security Cuts May Be Coming. Save my name, email, and website in this browser for the next time I comment. Smaller operator, all 737. In the meantime, the 737 MAX continues to drag on Southwest. Now Sun Country that could be a very different story. Its style and company profile do not present any viable merger candidates in the United States. Thoughts? The groundbreaking partnership is just one more way SkyWest provides aspiring aviators unmatched career opportunity in . This applies to ANY wildcat actions, including slowdown, work-to-rules, withdrawal of enthusiasm (WOE), sickouts, etc. Becker said, however, that depressed stock prices make doing a big airline deal now problematic. Since that forecast, fresh pandemic-related lockdowns have swept the globe amid rising infections and deaths. First Alaska has a long history as an independent and I have to think that over the years there have been other airlines that wanted to acquire them and got rejected. exactly how dumb are those management folks at Love Field ? Great if Alaska purchased Jet blue w/bonus of gaining more routes East Coast. The real reason why Southwest CEO Gary Kelly is so eager to reach new labor contracts probably has. In Q2 WN had the highest net margin DESPITE the issues with the MAX. Aurora. CANADA (FR), Last updated: 4:30 PM ET, Wed April 6, 2016. For one, the market cap of JetBlue is nearly $5.4B (vs just $2.9B for Spirit). Receive a 7% discount off standard rates for reservations of standard guest rooms at hotels that participate in the Marriott Bonvoy program when you book directly. For example, last summer Southwest dropped service to Newark (EWR) and 9 million New Jersey residents, citing the continued grounding of the MAX. Experts say losing Spirit would upend the travel . Not too many people would miss Sun Country and its planes fit. Matthew is an avid traveler who calls Los Angeles home. I just dont see an appetite for that. Why not buy Sun Country? 2008 - Acquired Tampa Cargo. Potentially even doing the unthinkable: Adding Airbus to the fleet. A new merger scramble could challenge that cozy arrangement. Photo: The Motley Fool. See what a point or mile is worth with our appraisals of a loyalty programs currency, based on redemption values. Travel Industry Coalition Urges Lifting of International Testing Requirement for Vaccinated Travelers. Though it might make more sense for it to merge with a legacy carrier (and become its low-cost wing) than for two legacies to merge with each other, approval for a Southwest merger would be very difficult, if not impossible, because of the low-cost carrier's size. So, yes, there are plenty of merger possibilities, but it is unclear if the next one will be expected (Frontier-Spirit) or something that few saw coming (like Alaska's acquisition of Virgin America). The aircraft are different, of course, which would require training and logistical upgrades. By numbers alone, JetBlues all-cash deal is superior, offering a roughly 40 percent premium to Frontiers original cash and share offer, based on share prices the day before JetBlue disclosed its bid. AirTran, meanwhile, charges $75 for reservation changes made after a purchase, in addition to a fee of $20 for the first checked bag and $25 for the second. Report Suggests Frontier Airlines Is Going Public, Selling Groups, family and Adventure Travel. Boeing gathered hundreds of pilots and reporters to unveil the changes to the MCAS stall prevention system, which has been implicated in the crashes in Ethiopia and Indonesia, as part of a charm offensive to restore the company's reputation. As a subscriber, you have 10 gift articles to give each month. United Airlines. Alaska and JetBlue would be a stronger force, as would American and Southwest. 5 will make for a stronger competitor.. The three remaining legacy carriers are too big to merge with each other. Unless you like paying more and getting less, asking for less competitive airlines is a bad idea. (Photo by FG/Bauer-Griffin/GC Images), conference at Southwest Airlines headquarters on April 17, 2018 in Dallas, Texas. However, after initially planning to operate the 717 and 737 fleets side by side, in 2012 Southwest Airlines decided that it made more sense to go back to the single fleet type strategy. This is actually an interesting theory. The boards of both companies approved the deal over the weekend. Southwest had a 7% share in Boston and a 3% share in New York, the latter before it announced plans to pull out of Newark. 301 Route 17 N, Suite 1150, Rutherford, NJ 07070 USA | Telephone: (201) 902-2000, U.S., It would be an upgrade for Spirits current customers as well. You could potentially convert some of those to XLR orders giving you the range to go to Europe or deep into South America. A brewing fight over the future of the budget carrier Spirit Airlines may give rise to a credible, albeit still smaller, competitor to the industrys giants. It is common for some problems to be reported throughout the day. A position that many have rumors and many would not have thought possible. They may have gained some additional routes and some young 737-700s. American Airlines. They cant be too dumb at Love Field. Such a partnership has been the subject of speculation since well before the Alaska-Virgin deal. For example, executives from Southwest visited Airbus to check out the A220 as early as April, reported The Air Current. provides, concessions can be made., Bidding War for Spirit Could Undercut Power of Four Big Airlines, https://www.nytimes.com/2022/04/08/business/spirit-airlines-jetblue-frontier.html. No, but we agree it increases with every month that Southwests growth ambitions remain neutered.". It would seem as if Southwest Airlines has a much stronger clientele base. That said, as Baker pointed out, Southwest's lack of fees and expanding that practice to JetBlue could be looked at positively by the regulator. While obviously a smaller number of aircraft, the A321neo does offer about 25% more seats than the MAX8, and so could address much of Southwests capacity growth needs. The AirTran merger brought a second type of plane -- the 717 -- into Southwest's fleet. However, in the fourth quarter Spirit posted revenues 1.8 percent higher than in 2019 at $988 million; Frontier revenues were down 7 percent year-over-two-years to $609 million. Youre facing American, United, Delta and Southwest with such enormous fleets and market penetration, said Samuel Engel, a senior vice president and airline industry analyst at ICF, a consulting firm. Regulators would probably never approve a merger between, say, United and Delta. *Average returns of all recommendations since inception. Were expecting M&A to occur. The rules here have not changed, but the enforcement will now result in a 30 day ban from APC for violations. Integrating airlines, including their computer systems and the seniority rankings of pilots and flight attendants, has never been easy and has led to widespread flight cancellations and long legal disputes.