Go Back  FlyerTalk Forums > Miles&Points > Airlines and Mileage Programs > JetBlue | TrueBlue
Reload this Page >

JetBlue offering to buy Spirit for $3.6B in Cash

JetBlue offering to buy Spirit for $3.6B in Cash

Old Apr 7, 22, 9:30 am
  #61  
 
Join Date: Sep 2015
Posts: 350
Originally Posted by GW McLintock View Post
A lot of those passengers [say they] fly JB on those routes because it is nicer than the competition. Of course if a not-so-nice option at a significant discount was available, I'm sure many would be happy to switch. The classic line is, "I'm never flying Spirit again!" (until they're the cheapest)

-J.
Right before the pandemic, I flew Spirit. They had some new spiffy planes. Granted, seating space was tight, but it was a decent cabin. I just wonder why B6 would have to spend so much to retrofit all its planes to remove those seats and add seat back devices. Maybe they could operate a separate brand like JB Spirit for a number of planes intended with dense cabins, and just have to repaint the aircraft on those.

Maybe I'm too optimistic as I know a likely scenario is a complete gut of Spirit- an asset grab, and elimination of a competitor and relatively minor service increases to JetBlue in maybe LAX and SFO, while most of Spirit's network and capacity is lost turning out more anti-competitive than Southwest's acquisition of AirTran.
jjbiv likes this.
beyondhere is offline  
Old Apr 7, 22, 9:40 am
  #62  
 
Join Date: Apr 2003
Programs: B6 Mosaic, Bonvoy LT Titanium (x SPG LT), IHG Spire, UA Silver
Posts: 5,257
Originally Posted by tphuang View Post
The assets imo are worth a lot more than vx assets at that merger.

It's also really hard to get near term aircraft deliveries and leases. It's really hard to staff operate those aircraft. There is no question there is a lot of real value here. Although, I haven't looked into how many of nk aircraft are owned vs leased.
Spirit only has 56 leased aircraft and aside from the A319s, their planes are all very new-around 73 less than 5 years old. This in an of itself is very valuable. Getting to 675 aircraft by 2026--with a majority being new and fuel efficient can not be underestimated. There is no way an airline the size of B6 could organically grow that fast.

This is about growing revenue not about keeping costs down to NK's level.
jjbiv and DenverBrian like this.
sfozrhfco is offline  
Old Apr 7, 22, 9:48 am
  #63  
 
Join Date: Apr 2003
Programs: B6 Mosaic, Bonvoy LT Titanium (x SPG LT), IHG Spire, UA Silver
Posts: 5,257
Originally Posted by beyondhere View Post
Right before the pandemic, I flew Spirit. They had some new spiffy planes. Granted, seating space was tight, but it was a decent cabin. I just wonder why B6 would have to spend so much to retrofit all its planes to remove those seats and add seat back devices. Maybe they could operate a separate brand like JB Spirit for a number of planes intended with dense cabins, and just have to repaint the aircraft on those.

Maybe I'm too optimistic as I know a likely scenario is a complete gut of Spirit- an asset grab, and elimination of a competitor and relatively minor service increases to JetBlue in maybe LAX and SFO, while most of Spirit's network and capacity is lost turning out more anti-competitive than Southwest's acquisition of AirTran.
It is quite simple. If your goal is to generate extra revenue, your customers are going to expect a particular product. You also don't want to have major parts of your fleet that can only fly on particular routes.

With a different product, you are serving different customers. 80% of the US market is taken by the big4 airlines. This helps B6 to compete with the actual competition--which is the big 4. B6 is nowhere near the scale of WN in the domestic market currently and the overlap with B6 routes and NK routes in only 11%. Where exactly will the combined carrier be the only option on any given route? A very small number if any.

Even with the NEA, NK adds a handful of flights at BOS, nothing at JFK, a few at EWR/LGA. The argument used for the NEA was to make AA/B6 more competitive with UA/DL in those markets. This will provide more competition with UA at EWR and thus keep UA's dominance in check--which is in an of itself pro consumer. Not every consumer is looking for the cheapest product--if they were we would all be walking around with $10 flip phones
sfozrhfco is offline  
Old Apr 7, 22, 3:13 pm
  #64  
FlyerTalk Evangelist
 
Join Date: Feb 2003
Location: Denver, CO, USA
Programs: Sometimes known as [ARG:6 UNDEFINED]
Posts: 25,381
Originally Posted by beyondhere View Post
Maybe they could operate a separate brand like JB Spirit for a number of planes intended with dense cabins, and just have to repaint the aircraft on those.
Highly doubtful. B6 isn't trying to acquire NK in order to have two airlines. I believe they'd want one set of aircraft standards, if for no other reason than interoperability during IRROPS.

It is likely much cheaper to refit and repaint planes to B6 standards (a one-time expense) than to attempt to operate two airlines inside a single carrier. See failed attempts for Ted (Rar!) and Song.
DenverBrian is offline  
Old Apr 7, 22, 4:09 pm
  #65  
nsx
Moderator: Southwest Airlines, Capital One
Hyatt Contributor Badge
 
Join Date: Sep 1999
Location: California
Programs: WN Companion Pass, A-list preferred, Hyatt Globalist; United Club Lietime (sic) Member
Posts: 20,874
Originally Posted by DenverBrian View Post
It is likely much cheaper to refit and repaint planes to B6 standards (a one-time expense) than to attempt to operate two airlines inside a single carrier.
I would like them painted blue on the top half and yellow on the bottom half. License the design from Ukraine. Jet Yellow/Blue to make green.
truncated likes this.
nsx is offline  
Old Apr 7, 22, 4:13 pm
  #66  
 
Join Date: Sep 2015
Posts: 350
deleted.

Last edited by beyondhere; Apr 8, 22 at 10:21 am
beyondhere is offline  
Old Apr 8, 22, 8:09 am
  #67  
 
Join Date: Feb 2004
Location: CLE
Programs: UA GS+LT UC, AA LT PLT, Fairmont LT PLT, SPG PLT, Hilton Diamond, Hyatt Diamond, Avis CHM.
Posts: 4,339
Originally Posted by AsiaTravel2019 View Post
I am not completely up on Spirit's network. Are their gates, slots etc. really worth $3.6 billion? Surely there is enough excess aircraft in existence to lease more planes.
Originally Posted by tphuang View Post
The assets imo are worth a lot more than vx assets at that merger.

You are looking at about 12 to 14 gates at fll, 4 to 5 gates at lax, close to 30 departure times at ewr, 10 to 15 pairs of lga slots, 3 bos gates and gates at constrained airports like ord.

It's also really hard to get near term aircraft deliveries and leases. It's really hard to staff operate those aircraft. There is no question there is a lot of real value here. Although, I haven't looked into how many of nk aircraft are owned vs leased.
But how many of those gates and slots will they have to divest of in order to gain regulatory approval for the merger?
ctownflyer is offline  
Old Apr 8, 22, 10:36 am
  #68  
 
Join Date: Dec 2001
Programs: DL 2MM, AA MM, DL Sky Club Life, AA Admirals Club Life, Hilton Gold Life
Posts: 1,617
Originally Posted by ctownflyer View Post
But how many of those gates and slots will they have to divest of in order to gain regulatory approval for the merger?

They don't need any stinkin jet bridges as Spirit passengers are used to the stairs
Lomapaseo is online now  
Old Apr 8, 22, 10:39 am
  #69  
 
Join Date: Sep 2015
Posts: 350
Originally Posted by ctownflyer View Post
But how many of those gates and slots will they have to divest of in order to gain regulatory approval for the merger?
With exception of FLL which I'm not sure, B6 wouldn't likely have to give up much at the other airports since it is significantly smaller than other carriers at these airports, even combined with Spirit. Any guess what will B6 do with the LGA slots? Just refocus on high frequency Florida, filling out MIA and MCO? Or could try something like launch LGA-ORD with a decent frequency?
beyondhere is offline  
Old Apr 8, 22, 10:43 am
  #70  
 
Join Date: Sep 2015
Posts: 350
Originally Posted by tphuang View Post
The assets imo are worth a lot more than vx assets at that merger.

You are looking at about 12 to 14 gates at fll, 4 to 5 gates at lax, close to 30 departure times at ewr, 10 to 15 pairs of lga slots, 3 bos gates and gates at constrained airports like ord.

It's also really hard to get near term aircraft deliveries and leases. It's really hard to staff operate those aircraft. There is no question there is a lot of real value here. Although, I haven't looked into how many of nk aircraft are owned vs leased.
I'm uncertain about EWR and its value that Spirit offers to this merger. JetBlue suspended EWR routes this summer, as it was least important to keep when times are tough. The Spirit flights target a low fare customer. Factor in United fortress hub and high airport costs, it's not like JetBlue will want to stick it through on routes like EWR-ATL even though Spirit flies it, and JetBlue has some history but not a very long history of operating the routes.
beyondhere is offline  
Old Apr 8, 22, 11:00 am
  #71  
 
Join Date: Apr 2004
Location: BOS
Programs: Marriott Plat / LTG, HHonors Gold, Nat'l Exec
Posts: 3,468
Originally Posted by beyondhere View Post
Would B6 need to convert all the NK planes to make them less dense?

A high dense format perhaps under a special brand could be beneficial on north-south leisure routes, e.g. PVD-MCO, BUF-MCO, BUF-FLL, PHL-FLL, along with the NK routes it chooses to keep, I assume PHL-MCO, DTW-MCO, DTW-FLL, etc and it could sell more seats, keep fare low on those route and help with regulatory approval.
There's really not that much difference between B6's new all-core A320 config and NK's all-economy A320 — B6 has 162 seats/27 rows and NK has 174 seats/29 rows.

The other NK A320 config (with Big Front Seats) is slightly denser (182 total seats and 31 rows), which is the same as their A320Neo config.

My guess is that as an interim step, JetBlue would just reconfigure NK A320s to 27 rows (replacing the BFS with EMS). I'd also guess some of the A320neos would quickly be in line for Mint configurations.

The A321ceo is the one plane where there's a sizable difference between the two — 200 seats / 34 rows on B6 vs 228 seats / 39 rows on NK. The B6 configuration is frankly kind of bizarre, though, particularly around the R2/L2 doors. Spirit only has 30 of these, though, so it wouldn't be a huge effect on the network if they lost capacity here.

I suspect the A319s would be gone pretty quickly.

Originally Posted by NYC Flyer View Post
IMHO, we shouldn't underestimate the fluidity/overlap of the NK/B6 (and NK/any carrier) "target" customer base. For the most part the FT perspective is stuck in the loyalty clouds. Most customers are shopping on schedule and price--they understand the freebies/extras of the various options and decide accordingly.

I concede that some smaller stations may necessitate rock-bottom pricing to stimulate the market sufficiently to even offer nonstop service.
B6's revised Blue Basic honestly doesn't offer a ton more frills than NK's Bare Fare — aside from the nicer cabin, snacks, and the freedom to avoid "gotcha" pricing penalties. No overhead carryon whatsoever (NK lets you pay for one), similar change fees. Just looking at random fares to FL in May, B6 seems to command a premium from some of their key markets like BOS, but e.g. on PHL-FLL nonstops they are actually undercutting NK.

Originally Posted by beyondhere View Post
Maybe I'm too optimistic as I know a likely scenario is a complete gut of Spirit- an asset grab, and elimination of a competitor and relatively minor service increases to JetBlue in maybe LAX and SFO, while most of Spirit's network and capacity is lost turning out more anti-competitive than Southwest's acquisition of AirTran.
I suspect the truth is somewhere in between — probably a net positive for people in JetBlue's focus cities and larger cities JetBlue doesn't currently serve well, and a net negative for leisure travelers from smaller markets. Undoubtedly there are some NK routes that just won't make sense for B6. NK's route map has some weird eccentricities — e.g., they fly to multiple FL cities from Latrobe, PA, which is 33 miles from PIT.

On the other hand, the NK fleet would give them a huge amount of extra capacity overnight, along with crew to operate it. That capacity could be redirected to the areas where B6 has planned growth but hasn't had the planes to implement it. NK also has a lot more strength in the Midwest, where B6 has struggled to grow — they're the #2 carrier at DTW, and have a decent number of flights from ORD.

NK's order book also gives them a lot of options. I suspect the A319neo orders would quickly be converted to A220. NK also has 100 A320/A321neo orders; if some of those could be converted to LR / XLR models, it would be a huge help in accelerating TATL service.
dtremit is offline  
Old Apr 8, 22, 11:10 am
  #72  
FlyerTalk Evangelist
Marriott Contributor BadgeAccor Contributor Badge
 
Join Date: Mar 2009
Location: NYC
Programs: DL KM, AS MVP, F9 50K, Bonvoy Plat, RHG Gold, Hilton Gold, Natl Exec, Avis PC, Greyhound Road Rwds
Posts: 12,499
$JBLU is approaching its 52-week low. To be expected, but this is low

-J.
GW McLintock is offline  
Old Apr 8, 22, 12:07 pm
  #73  
FlyerTalk Evangelist
 
Join Date: Feb 2003
Location: Denver, CO, USA
Programs: Sometimes known as [ARG:6 UNDEFINED]
Posts: 25,381
Originally Posted by dtremit View Post
B6's revised Blue Basic honestly doesn't offer a ton more frills than NK's Bare Fare aside from the nicer cabin, snacks, and the freedom to avoid "gotcha" pricing penalties.
Live seatback TV. Wouldn't discount that as a significant value-add.
N830MH likes this.
DenverBrian is offline  
Old Apr 8, 22, 1:54 pm
  #74  
 
Join Date: Dec 2021
Programs: AAdvantage, SkyMiles, TrueBlue
Posts: 59
Originally Posted by GW McLintock View Post
$JBLU is approaching its 52-week low. To be expected, but this is low

-J.
Definitely shocking how low it is going, but a good bit of that is certainly expected in typical stock price analysis! Typically acquirer-co shares dip on announcement (HBS) due to an increase in retail short-selling and academic theory also expects the momentum theory to be further exacerbated on merger announcements for acquirer-cos (UChicago) (that is, a cooling market [present] will be further hurt by M&A announcements, while a hot market is further lifted on M&A announcements, which are typically reversed in the long-term)

It will be interesting to see how the market reacts in the next few weeks as more details are released.

I'm most excited for more details how they plan to sell it to DOJ..."We strongly believe we can secure anti-trust approval and close the transaction and a definitive agreement would include contractual commitments designed to address regulatory concern, including a reverse breakup fee payable to Spirit" (Investor Call 4/6/22)
marathonerNYC is offline  
Old Apr 9, 22, 9:14 pm
  #75  
FlyerTalk Evangelist
 
Join Date: Nov 2005
Location: Phoenix, AZ
Programs: AA Gold AAdvantage Elite, Rapids Reward
Posts: 37,350
Originally Posted by dtremit View Post
NK's order book also gives them a lot of options. I suspect the A319neo orders would quickly be converted to A220. NK also has 100 A320/A321neo orders; if some of those could be converted to LR / XLR models, it would be a huge help in accelerating TATL service.
Yes, That'll be great. They will be converted it to A220-100/300 or even -500, if they launched. I think some A321neo orders will be converted to A321LR or -XLR models. Yes, that will be big help. Hope it works.
N830MH is offline  

Thread Tools
Search this Thread