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[Agreement terminated March 2024] B6, NK agree to $3.8 billion merger

[Agreement terminated March 2024] B6, NK agree to $3.8 billion merger

Old Mar 7, 2023, 8:46 am
  #46  
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Not so fast!

Justice Department set to block JetBlue's $3.8 billion deal for Spirit Airlines

-J.
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Old Mar 7, 2023, 11:49 am
  #47  
 
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Originally Posted by GW McLintock
was expected when merger was first announced. Will see if B6 and lawyers can make a strong case

surely getting rid of spirit is a net positive for the US customers in terms of quality of life
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Old Mar 7, 2023, 2:14 pm
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Originally Posted by Flyertalker1
Surely getting rid of spirit is a net positive for the US customers in terms of quality of life
Debatable. On the one hand, additional seat pitch and amenities will be provided to those who would have flown Spirit. On the other hand, it will likely mean some people will not be able to take a trip they would have because B6 prices increased materially from Spirit's current pricing, some routes will be cut because they don't work on a B6 cost/pricing structure, and prices overall will likely increase with the supply being removed from the system (equivalent to about 1% of US airlines' total estimated ASMs in the Americas when the reconfig is done). Additionally, those who would have paid for a BFS will now have a Mint-less cabin and no 'big front seat' to upgrade to on B6, outside of a few main routes.

Yes, quality of life will get better for those who can afford to take a different carrier, but I don't think those who can no longer afford to go to city X to see family bc the airfare is now several hundred more will consider that a QoL improvement, despite jokes about not having to experience Spirit's discomfort to the contrary.
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Old Mar 7, 2023, 4:43 pm
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Originally Posted by lowfareair
Debatable. On the one hand, additional seat pitch and amenities will be provided to those who would have flown Spirit. On the other hand, it will likely mean some people will not be able to take a trip they would have because B6 prices increased materially from Spirit's current pricing, some routes will be cut because they don't work on a B6 cost/pricing structure, and prices overall will likely increase with the supply being removed from the system (equivalent to about 1% of US airlines' total estimated ASMs in the Americas when the reconfig is done). Additionally, those who would have paid for a BFS will now have a Mint-less cabin and no 'big front seat' to upgrade to on B6, outside of a few main routes.

Yes, quality of life will get better for those who can afford to take a different carrier, but I don't think those who can no longer afford to go to city X to see family bc the airfare is now several hundred more will consider that a QoL improvement, despite jokes about not having to experience Spirit's discomfort to the contrary.
where are you getting that B6 is hundred more on a similar fare for identical routes?

certainly not the case in Florida at most B6 locations
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Old Mar 7, 2023, 5:50 pm
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Originally Posted by Flyertalker1
where are you getting that B6 is hundred more on a similar fare for identical routes?

certainly not the case in Florida at most B6 locations
They will be when Spirit is gone and the ULCC competition doesn't exist. DOJ also has some nice quotes in their complaint to support this, such as "in 2022, JetBlue concluded that when Spirit exits a route, fares increase by 30% on average". That's not the government, that's jetBlue finding that.
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Old Mar 7, 2023, 10:31 pm
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Originally Posted by lowfareair
They will be when Spirit is gone and the ULCC competition doesn't exist. DOJ also has some nice quotes in their complaint to support this, such as "in 2022, JetBlue concluded that when Spirit exits a route, fares increase by 30% on average". That's not the government, that's jetBlue finding that.
B6 already noted they will forfeit gates in NYC / FL markets to allow other ULCC competition to grow

how many routes in major cities has Spirit exited? Cant be many
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Old Mar 8, 2023, 7:02 am
  #52  
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Originally Posted by Flyertalker1
B6 already noted they will forfeit gates in NYC / FL markets to allow other ULCC competition to grow

how many routes in major cities has Spirit exited? Can’t be many
Competition by whom? Other than Frontier, you have Allegiant and Avelo (and arguably Breeze), none of which really has the breadth of Spirit's operation. In NYC we will only have Frontier. At LGA, we are losing the majority of our ULCC options as Spirit has a lot more flights than Frontier. There's no way Frontier will backfill all of that, and I doubt Breeze or Avelo are in any rush to get into LGA.

As far as I am concerned this is a net loss for the consumer.

-J.
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Old Mar 8, 2023, 8:23 am
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Originally Posted by GW McLintock
Competition by whom? Other than Frontier, you have Allegiant and Avelo (and arguably Breeze), none of which really has the breadth of Spirit's operation. In NYC we will only have Frontier. At LGA, we are losing the majority of our ULCC options as Spirit has a lot more flights than Frontier. There's no way Frontier will backfill all of that, and I doubt Breeze or Avelo are in any rush to get into LGA.

As far as I am concerned this is a net loss for the consumer.

-J.
Allegiants core business model is non-stops in markets that they feel are underserved.Their core product is along the lines of North Dakota to Punta Gorda, Florida because they can make good margins that way; Id be really surprised to see them try a highly competitive corridor like NYC to South Florida because they feel like they are way more profitable flying Sioux Falls to Ft Lauderdale.
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Old Mar 8, 2023, 8:57 am
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Originally Posted by GW McLintock
Competition by whom? Other than Frontier, you have Allegiant and Avelo (and arguably Breeze), none of which really has the breadth of Spirit's operation. In NYC we will only have Frontier. At LGA, we are losing the majority of our ULCC options as Spirit has a lot more flights than Frontier. There's no way Frontier will backfill all of that, and I doubt Breeze or Avelo are in any rush to get into LGA.

As far as I am concerned this is a net loss for the consumer.

-J.
Originally Posted by beachmouse
Allegiant’s core business model is non-stops in markets that they feel are underserved.Their core product is along the lines of North Dakota to Punta Gorda, Florida because they can make good margins that way; I’d be really surprised to see them try a highly competitive corridor like NYC to South Florida because they feel like they are way more profitable flying Sioux Falls to Ft Lauderdale.
In a hypothetical, I don't think Allegiant would want to compete on LGA-FLL but it could move it's EWR operations to LGA and just not serve EWR, like Southwest and AirTran had done.

In hypothetical, Frontier could buy up most of the slots from Spirit and Allegiant and the smaller ULCCs taking the rest. Frontier could certainly backfill. It has a sizeable presence in PHL and BWI and not sure why it couldn't at LGA.

Anyways, the DOJ anyways is shooting down the merger for greater reason of competition nationally, than issues in the NYC market. JetBlue's management was brash to think that the concerns could be remediated at BOS, NYC and FLL and ignoring the big picture of it removing a large ULCC.

Last edited by beyondhere; Mar 8, 2023 at 9:05 am
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Old Mar 8, 2023, 9:12 am
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Originally Posted by beyondhere
In a hypothetical, I don't think Allegiant would want to compete on LGA-FLL but it could move it's EWR operations to LGA and just not serve EWR, like Southwest and AirTran had done.

In hypothetical, Frontier could buy up most of the slots from Spirit and Allegiant and the smaller ULCCs taking the rest. Frontier could certainly backfill. It has a sizeable presence in PHL and BWI and not sure why it couldn't at LGA.

Anyways, the DOJ anyways is shooting down the merger for greater reason of competition nationally, than issues in the NYC market. JetBlue's management was brash to think that the concerns could be remediated at BOS, NYC and FLL and ignoring the big picture of it removing a large ULCC.
As others have also speculated, I have a feeling the DOJ will settle for B6 giving up the NEA (potentially with some other token things like a small number of gates at FLL), and may even be willing to let B6 'walk back' some of the concessions already given in if they give up the NEA. The filing leans way too heavily on the NEA for the DOJ not seeing that as a sticking point.
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Old Mar 8, 2023, 2:10 pm
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Originally Posted by lowfareair
As others have also speculated, I have a feeling the DOJ will settle for B6 giving up the NEA (potentially with some other token things like a small number of gates at FLL), and may even be willing to let B6 'walk back' some of the concessions already given in if they give up the NEA. The filing leans way too heavily on the NEA for the DOJ not seeing that as a sticking point.
I'm not for this merger but if I was wearing JetBlue's hat, I could see how this is unfair that other mergers of larger carriers were permitted.

And the basis for the lawsuit is that Spirit is an ULCC, JetBlue is not and would eliminate ULCC options with Spirit capturing a significant share of ULCC business, as if ULCC airlines are a separate and distinct market or business altogether from non ULCC airlines.
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Old Mar 8, 2023, 2:53 pm
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To add, for previous mergers, when there were slot divestitures, DOJ favored it to go to LCCs, which included ULCCs, but Southwest always benefited the most being the largest of them all. DCA has little ULCC representation, but manages having low fares and competition.

Now the case presented is LCCs arent disruptors, its ULCCs and really just Spirit, as Frontier and Allegiant are excluded for not having enough dailies. Its all mentioned in the 43 page report from the DOJ.

If the DOJ is going hard on JetBlue, it should look at Southwest or at least the gates and slots it took from AirTran.
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Old Mar 8, 2023, 4:10 pm
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Originally Posted by beyondhere
I'm not for this merger but if I was wearing JetBlue's hat, I could see how this is unfair that other mergers of larger carriers were permitted.
That's what I'm getting at - this would put AA, one of the 3 largest by itself, in a joint venture with the new 5th largest and alliance with the 6th. This would likely be used as precedent for further deep-rooted alliances, and likely between 2 of the other big 4. AA's AS/B6 alliances with Spirit added is 434B ASMs in 2022. UA+WN or DL+WN is under 400B and UA+DL is not much larger at 480B.

With the size of the alliance AA would have, it could fuel 2 of the other big 3 to form an alliance and/or seek some sort of ATI for a JV using the AA alliances as precedent. That leaves 1 out in the cold, potentially paving the way towards a longer term 'big 2' competition-wise.

That's why this merger wouldn't have anywhere near the amount of scrutiny if it wasn't for the NEA.
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Old Mar 12, 2023, 8:48 pm
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Originally Posted by lowfareair
That's what I'm getting at - this would put AA, one of the 3 largest by itself, in a joint venture with the new 5th largest and alliance with the 6th. This would likely be used as precedent for further deep-rooted alliances, and likely between 2 of the other big 4. AA's AS/B6 alliances with Spirit added is 434B ASMs in 2022. UA+WN or DL+WN is under 400B and UA+DL is not much larger at 480B.

With the size of the alliance AA would have, it could fuel 2 of the other big 3 to form an alliance and/or seek some sort of ATI for a JV using the AA alliances as precedent. That leaves 1 out in the cold, potentially paving the way towards a longer term 'big 2' competition-wise.

That's why this merger wouldn't have anywhere near the amount of scrutiny if it wasn't for the NEA.
Yeah, JetBlue involved in the NEA certainly doesn't help the case for this merger.

JetBlue scooping up Frontier would have been a better fit, as JetBlue would have acquired the DCA-DEN rights and able to target business pax out of it, and it would helped their DCA business. Plus the larger ULCC, Spirit, would still be around so the DOJ likely wouldn't have as much an issue (assuming also the NEA ended) if JetBlue removed the number two carrier, one that doesn't fly daily on most of its routes (I think).

So does JetBlue try to settle this with more concessions, or does it just abandon and pay the break up fee?
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Old Mar 12, 2023, 11:02 pm
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Originally Posted by lowfareair
That's what I'm getting at - this would put AA, one of the 3 largest by itself, in a joint venture with the new 5th largest and alliance with the 6th. This would likely be used as precedent for further deep-rooted alliances, and likely between 2 of the other big 4. AA's AS/B6 alliances with Spirit added is 434B ASMs in 2022. UA+WN or DL+WN is under 400B and UA+DL is not much larger at 480B.

With the size of the alliance AA would have, it could fuel 2 of the other big 3 to form an alliance and/or seek some sort of ATI for a JV using the AA alliances as precedent. That leaves 1 out in the cold, potentially paving the way towards a longer term 'big 2' competition-wise.

That's why this merger wouldn't have anywhere near the amount of scrutiny if it wasn't for the NEA.
so the NEA gets dropped as a concession? NEA is significantly less valuable than additional planes and slots from Spirit.

Bigger JetBlue can bring down pricing against the big 3 in key markets - ATL / DTW / ORD / DFW / IAH - most of which are captive to one major airline
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