Judge blocks JetBlue-Spirit merger after DOJ's antitrust challenge

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ascottallison@reddit

I don't think Spirit will go bankrupt in the short term. Back in October they had $1.2 billion in cash and equivalents available. They'll also get a breakup fee from JetBlue which will help. They definitely need to get back to profitability, but they have a little breathing room to do so.

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Ragnar_the_Pirate@reddit

How short is short term?

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Strong_Arrival7388@reddit

Haha, they have 2x debt as revenue. They leased a ton of planes out to get that 1.2 billion. Great day fir consumers when DOJ thinks a company not making money is a example of competition. Like what's the deal for the big 4, they paying soneone

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Raccoon-Solid@reddit

That judge was a stupid fucking idiot for doing that. Hindsight isn't even 20/20 here.

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aznkevin91@reddit

This is probably corruption with the DOJ protecting the large airlines by preventing other large airlines from forming

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KirenSensei@reddit

8 months later and funny thing happening right now. Millions of travelers are facing increasingly high ticket prices. Lol funny how that reasoning backfired not even a year later.

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Sufficient-Ad-9227@reddit

Spirit filed today! I would love some media coverage questioning the DOJ and the judge who said “…this one’s for you.” Completely unsound reasoning. Not to mention Spirit has furloughed hundreds of pilots already. Way to go US GOVT!

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bdepz@reddit

JetBlue and Alaska should have merged, that would have created a true competitor to the big 4. virgin shouldn't have been allowed to merge with Alaska. JetBlue taking over spirit would be terrible for US aviation. Imagine your only low cost option being frontier

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Such-Shape-7111@reddit

This aged poorly, Spirit is about to file for bankruptcy and disappear anyway.

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bdepz@reddit

They aren't considering Chapter 7 bankruptcy. So it would be a restructure or sale. But yeah, not looking great for them either way.

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SoothedSnakePlant@reddit

That's going to happen anyway, Spirit can't exist on its own, they will either now try to merge with frontier, or simply disintegrate.

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Such-Shape-7111@reddit

As of today, your prediction came true, spirit may be filing bankruptcy

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SoothedSnakePlant@reddit

However, in that time, Breeze has started to emerge as being (for now) somewhat stable, so it's not just Frontier that's left. Which I'm kinda glad about, I actually like what Breeze is trying to do.

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Such-Shape-7111@reddit

I agree, I think Breeze has the upper leg against traditional ULCCs by adopting the Allegiant model of flying to secondary airports. They don’t have much competitors on a lot of routes and that favors them.

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SoothedSnakePlant@reddit

Yeah, Allegiant at a large scale going from secondary cities to secondary cities or secondary airports in major cities is a neat way to kinda sorta bring a Ryanair route network to life here. With Spirit dropping routes left and right, they're primed for some expansion when they start getting their next round of A220 deliveries.

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bdepz@reddit

Spirit can't exist on its own, or it can't exist in its current state? Pre-pandemic spirit seemed pretty strong financially, no?

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404_USER_UNAVAILABLE@reddit

They could always merge with Allegiant... their business model seems to be working, and they were profitable in most recent quarters, and are forecasted to be profitable in future quarters. I know they're two different types of ULCC, but Spirit has decent fleet commonality and could help Allegiant grow much faster. The only way that I think it could really work is if they did a stock swap, but it has at least some merit.

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jtbis@reddit

Allegiant is a bit of a different game. They make their name flying into underserved airports, while Spirit flies mainly popular routes.

Allegiant also relies on older, used A320 with low fleet utilization. Spirit does the opposite.

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fireandlifeincarnate@reddit

Well, that explains why Allegiant seems to be the only people at KLEX I see with any regularity

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SoothedSnakePlant@reddit

Yeah, Allegiant and Breeze are a much more compatible pair if we're talking about future mergers.

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Peterlynch7@reddit

Yep Spirit borderline bankrupt

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jtbis@reddit

That’s what they were planning to do before JetBlue got into the bidding war.

I don’t think that is a good option either. At least at my airport (BWI), there is some healthy competition between Spirit and Frontier. Fares on overlapping routes have drastically reduced as a result. If they merged, fares would go up because they could just charge a few dollars less than Southwest.

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SoothedSnakePlant@reddit

There is no world where that competition is sustained, Spirit is going away, one way or another, and in fairly short order.

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Repa24@reddit

Idk, but can Frontier exist on its own? Their earnings have not been great either.

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boobooaboo@reddit

I still don't understand this viewpoint. If yellow changed their product from ULCC to. LCC a la WN/B6, there's nothing to stop them from doing that and raising ticket prices anyway. People forget that flying is not a RIGHT, it is a privilege.

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tankmode@reddit

this would be sort of bummer as Alaska is still pretty customer friendly and Jetblue really went down hill when they kicked out david neelman. we are completely dependent on alaska in the PNW

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malcontentII@reddit

The DOJ has made it clear. They aren't letting any airline merger through.

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tolbs02@reddit

If that is the case, then Alaska/Hawaiian will be blocked as well.

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munchi333@reddit

Good thing the DOJ doesn’t get to arbitrarily make those decisions lol. They will have to be upheld by the courts.

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malcontentII@reddit

True; they have definitely been emboldened to sue now though.

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SirEnricoFermi@reddit

Do Sun Country and Allegiant not fill that low-cost role also?

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yourlocalFSDO@reddit

Imagine your only low cost option being frontier

Well when Spirit goes bankrupt that's exactly what will happen anyway

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Phospherus2@reddit

Exactly. A Spirit and Frontier merger, Frontier actually had an offer to buy Spirit before Jetblue came in, would be great for the ULCC market.

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DJMFS@reddit

So the judge was more worried about increased fares on Spirit routes (think to/from ACY) over increased legroom and better amenities

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SoothedSnakePlant@reddit

So basically, in pursuit of protecting the consumer, the government is going to prevent anyone from ever growing into a large enough airline to challenge the big 3 ever again. This basically kills jetBlue completely, they have nowhere to go from here if they aren't allowed to acquire other airlines, and Spirit was the target for this because they were dead in the water already.

Alaska and Hawaiian presumably won't be allowed to happen either.

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auxilary@reddit

this is a wild oversimplification. in multiple markets, jetblue and spirit combined would have over 90% of the market share if they merged. how does that help consumers?

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SoothedSnakePlant@reddit

They repeatedly said they'd give up routes or slots where necessary to avoid dominating a given market beyond what was deemed acceptable.

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auxilary@reddit

again, since when has an airline said they would avoid dominating a market in their merger filing and then actually followed through on that?

your reciting talking points that identify you as someone who doesn’t understand very basic principles of the aviation industry

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MJDiAmore@reddit

JetBlue voluntarily gave up slots at DCA when it was simply trying to ally with American.

That was also blocked and the consumer is worse off for it because JetBlue has dialed back on the DC market substantially as a result.

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SoothedSnakePlant@reddit

Uhhhh, plenty of times actually. It's a very normal thing for mergers to be conditionally approved with stipulations added in by the government saying that the combined entity has to sell certain assets or reduce operation in a certain market, theybdo this all the time. The judge in this case even explicitly asked the DOJ prosecuted if they would be okay with the merger if he added in those exact things.

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auxilary@reddit

yes, i understand that, but can you point to an example where that actually happened in the aviation industry?

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SoothedSnakePlant@reddit

American and US Airways required them to give up slots at both LaGuardia and Washington-Reagan and they did it just fine.

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auxilary@reddit

they laundered them. via delta. they own them again.

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SoothedSnakePlant@reddit

They don't though. American and US Airways used to combine for nearly 40% of all flights out of LGA. Post merger, American now accounts for 23%.

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mudojo@reddit

So the solution is to let Spirit go bankrupt? How would that help consumers?

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cairns1957@reddit

90% of the market share? Are you on crack?

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toga_virilis@reddit

Yeah, I think Fort Lauderdale is probably their biggest shared market, and they only combine for about 50%, there.

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nopal_blanco@reddit

Alaska and Hawaiian will likely happen because their merger won’t remove options from most consumers. They serve different markets and customer bases.

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SoothedSnakePlant@reddit

Got it, so two non regional airlines can't merge which still effectively prevents anyone from challenging the highly consolidated market that the DOJ themselves created.

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nopal_blanco@reddit

I’m just telling you why Alaska and Hawaiian will likely go through. I’m not the DOJ. You must’ve owned $SAVE.

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SoothedSnakePlant@reddit

Nah, I just fly exclusively with jetBlue whenever possible because their product in economy was unbeatable along the coasts and I'm frustrated that the DOJ has basically shot down every attempt at a survival strategy that people can come up with in a fucked up market that the DOJ is responsible for.

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nopal_blanco@reddit

JetBlue will be fine regardless of what happens. It’s Spirit who won’t be if they can’t be bought. You’ll still have your carrier of choice.

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SoothedSnakePlant@reddit

JetBlue are losing money hand over fist right now and were already strategizing for the future with an "acquire or be acquired" mindset for years. That's why they wanted Virgin America years ago. They're in a position where the only way to actually start making money again is to massively shrink or massively grow, and they're being told that they can't grow.

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Dismal-Mortgage-1152@reddit

Sounds like a poorly run business

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SoothedSnakePlant@reddit

Any airline that isn't large enough to compete with the big 4 is a losing proposition with the way the deregulated airline market had been allowed to shake out to this point. With the US airline market being what it is, you need to be large enough to have a frequent flyer program that you can make a bunch of money off of so that you can sustain the losses incurred by the price of running the actual airline.

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PineStateWanderer@reddit

Delta is getting 7bil from Amex alone lol

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HotWheels57Chevy@reddit

Spitting facts, the DOJ needs to be abolished.

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SoothedSnakePlant@reddit

I absolutely wouldn't go that far. I'd just say that the DOJ can't suddenly start imposing rules that prevent new entrants from competing in sectors that the DOJ themselves have already fubar'ed

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Sasquatch-d@reddit

Natural growth is possible. JetBlue has done well tapping into European markets, signing codeshare agreements with foreign carriers, and own a world class terminal at JFK. Yet they hesitate on a widebody order. A subfleet of A350s could do them well in expansion but for whatever reason they seem to settle on being content as an Airbus narrowbody airline.

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mylefthandkilledme@reddit

Removing competition doesnt lower prices..

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caverunner17@reddit

Spitballing here: Wouldn't a Hawaiian, JetBlue and Alaska merger be a valid competitor to the big 4?

Alaska and Hawaiian both have bases on the west coast, JetBue on the east. Maybe create a mid-sized hub in a central midwest city (St Louis??) to help with connecting traffic.

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BroasisMusic@reddit

St. Louis being a hub for any major airline again is sadly a pipe dream. Lambert's terminal facilities are sorely outdated (and one of them is dedicated entirely to Southwest), and they have some of the highest landing fees in the whole country. While the newest runway does add capacity, it was a poorly thought out addition as no one wants to take off on 11 or land on 29 due to the taxi distance.

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adjust_your_set@reddit

Alaska / JetBlue combining seems like the more natural merger. Creates a 5th national carrier without eliminating a ULCC.

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jbethel811@reddit

They have nothing in common though. Completely separate crew bases (sharing only LAX), different Unions, and most importantly, completely different mottos when it comes to aircraft types.

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Sasquatch-d@reddit

Can we stop with the merger obsession in the US? The B6/NK merger is being blocked most specifically for its anti-competitive nature.

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SirEnricoFermi@reddit

It's probably better for consumers to keep all 3 separate and partially competing as they are now. Alaska, Hawaiian, and JetBlue are financially healthy and stable, might as well keep them competing.

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adjust_your_set@reddit

Hawaiian is not financially stable.

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abcpdo@reddit

they are merging with alaska

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toga_virilis@reddit

After this, I wouldn’t be so sure.

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LowValueAviator@reddit

There’s no accountability for government, especially judicial, meddling like this but in a just world Spirit would fold (or need an expensive bailout) and this guy would get fired for incompetence. “This one’s for you,” what a jerk.

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AvocadoKirby@reddit

I’m just here to comment that this is one of the most level-headed, reasonable conversation I’ve ever witnessed on reddit.

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No1PaulKeatingfan@reddit

The convos across the entirety of reddit seem to quite reasonable as a whole.

Looks like the bankruptcy line continually repeated by Jetblue lawyers seem to have worked

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Phospherus2@reddit

Why was the first post about this deleted? Its newsworthy

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BrewCityChaser@reddit

I'm the one who originally submitted this link. At the time, the headline of the article read 'Judge blocks JetBlue-Spirit merger in a major win for Biden’s Justice Department", which I copied directly from the page (you'll notice that exact sentence is included in the url of the link I used when it was initially published. Then the editor for the story changed it to the current headline, so shortly afterwards, the mods thought that I had editorialized the headline and removed my submission.

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AtlantaFilmFanatic@reddit

Mods having a power trip over something inconsequential? Who would’ve guessed.

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hankjmoody@reddit

Nah, if you had taken the time to look, it was an action taken by the moderator 'group' account. So more likely a different mod logged in for a stint, didn't bother looking into things, and just cleared the modqueue. Even checking the modlog, unless they're manually recording mod actions off-Reddit (which would be idiotically wasteful of time), there'd be no way of really knowing who did what previously.

I'm still not sold on that kind of mod action, but it is getting more common on larger subs.

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BrewCityChaser@reddit

I'm the one who originally submitted this link. At the time, the headline of the article read 'Judge blocks JetBlue-Spirit merger in a major win for Biden’s Justice Department", which I copied directly from the page (you'll notice that this is the same sentence that is in the url of the link when it was published). Then the editor for the story changed it to the current headline, so shortly afterwards, the mods thought that I had editorialized the headline and removed my submission.

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bretthull@reddit

Probably turned into political pissing match.

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AnimeAlt44@reddit

Or likely it turned into the only thing worse than internet politics discourse: Internet business morals discourse.

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drtywater@reddit

I disagree with folks saying this is bad. Mergers are bad for consumers and workers. We have had more then enough consolidation in the airline industry. At a minimum let em go bankrupt and let a PE firm buy em and run the airline.

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RulerofKhazadDum@reddit

Good. There’s already less competition in other sectors, consumers don’t need to be screwed even more

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Goodbye-Felicia@reddit (OP)

Spirit is on the verge of bankruptcy, and jetblue isn't doing super hot themselves. This ruling could very well cause two airlines to collapse leading to a lot less competition.

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auxilary@reddit

hang on, this doesn’t make sense. are you saying that if both jetblue and spirit fail, that not only will nothing come from the ashes of those airlines but that the remaining airlines will acquire those jetblue and spirit routes reducing overall competition?

saying that neither airline would survive bankruptcy and that a competitor would gain the routes of the defunct airlines shows just how very little you know about the economics of the aviation industry

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toga_virilis@reddit

I mean that’s literally exactly what happens. They fail and competitors pick up slots and airframes.

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metsfanapk@reddit

The judge specifically talked about this " failing firm" defense said they presented no evidence and their executives said they have a path to profitability (under oath)

"Although Spirit is struggling, its executives testified that the airline had a long-term plan to return to profitability. See, e.g., Tr. Ex. 678 at 2; Tr. 11/7/2023 Case 1:23-cv-10511-WGY Document 461 Filed 01/16/24 Page 101 of 113[99] (Gardner/Spirit) 75:2-10. JetBlue is also far from the only available purchaser, should Spirit find itself in dire need. "

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Palmettopilot@reddit

Let’s break up DL and NW, UA and CA, AA and TWA, US Airways, America west.

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cairns1957@reddit

That sucks. I could fly Jet Blue but would never get on a Spirit aircraft.

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Hungryforflavor@reddit

Its all about who u know in the Capitol. How about when United was on its last legs and Continental baled them out . Sad

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LostPilot517@reddit

This was a straight up mistake by the DOJ. Hawaiian, now Spirit on the verge of bankruptcy,

Alaska is looking for more revenue opportunities and spending a fortune looking for it, buying VA, now Hawaiian.

JetBlue is stagnant and can't do anything. Same story for Frontier, and Allegiant is doing well, but doing their own thing, but for how long.

All of these carriers are too small to compete in the new labor and inflation markets and too big to have flexibility and pivot capabilities.

Profit is hard enough competing with the Big 4, with the limited revenue they are able to generate in today's highly competitive industry. Now any little profit they had is being attacked from the bottom, with small, nimble carriers like Breeze and Avelo.

Consolidation of the 6 Middle market airlines has to happen if you expect any of them to be around in the future. That is my opinion alone.

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