Skift Travel News Blog

Short stories and posts about the daily news happenings around the travel industry.

Airlines

Spirit Airlines Shareholders Approve JetBlue Merger

3 months ago

The JetBlue Airways and Spirit Airlines merger is a step closer to reality with the approval of the latter’s shareholders Wednesday.

Investors in Miramar, Florida-based Spirit approved the $3.8 billion deal with more than 50 percent voting in favor. Shareholder approval was a key, though not final, step in merging the U.S.’ sixth and seventh largest airlines.

“Today’s vote is a major milestone in our plan to join with Spirit to create a high-quality, low-fare national challenger,” a JetBlue spokesperson said.

JetBlue and Spirit still must secure regulatory approval from the U.S. Justice Department before the merger can close. That is far from a guarantee with the Biden administration taking a firm stance against consolidation in major industries, and for additional competition.

Both JetBlue and Spirit argue that by merging they will be a more formidible competitor to the largest U.S. carriers — American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines. But the combination would also remove the country’s largest budget airlines, Spirit, leaving the market entirely to smaller Frontier Airlines.

In July, Frontier lost a bidding war with JetBlue for Spirit.

JetBlue and Spirit hope to secure regulatory approval and close their merger by the first half of 2024.

Airlines

JetBlue and Spirit Airlines Set October Date for Merger Vote

5 months ago

JetBlue Airways may have won over the board and management of Spirit Airlines in its bidding war with competitor Frontier Airlines for the discounter. But JetBlue still needs to sway shareholders before the deal can move forward.

Spirit has scheduled an October 19 shareholder meeting for a vote on JetBlue’s $3.8 billion takeover offer. Investors in the airline have been down this road before with Spirit scheduling and either postponing or suspending four previous meetings on Frontier’s failed offer.

But even if Spirit shareholders approve the JetBlue offer as is expected, the merger still has a steep hill to climb with the Department of Justice. The regulator, whose approval is key to the combination, has yet to weigh in on the merger that would remove a budget competitor from the U.S. market, and make JetBlue the fifth largest domestic player.

(vic_206/Flickr)

Airlines

U.S. Unveils New Airline Customer Service Portal

5 months ago

Air travelers in the U.S. now have a one-stop shop when it comes to knowing what airlines will provide them with in the event of a lengthy flight delay or cancellation.

The new Airline Customer Service Dashboard by the Department of Transportation is designed to “ensure the traveling public has easy access” to airline commitments in the event of a disrupted trip, the regulator said Thursday. The commitments, which are largely a list of existing airline policies compiled together in one place, only apply to “controllable” events, or one where the airline is at fault, for example staff shortages.

(DOT)

“Passengers deserve transparency and clarity on what to expect from an airline when there is a cancelation or disruption,” U.S. Transportation Secretary Pete Buttigieg said. “This dashboard collects that information in one place so travelers can easily understand their rights, compare airline practices, and make informed decisions.”

For example, if a travelers flight is delayed more than three hours due to a mechanical problem with the aircraft, the dashboard shows that they are guaranteed a meal voucher on almost all major airlines except Allegiant Air. However, if their flight is cancelled, only American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, and United Airlines will rebook them on another carrier.

“Carriers welcome opportunities to simplify travel policies, clarify existing practices and increase transparency for travelers,” a spokesperson for trade group Airlines for America said.

The new dashboard follows a spike in flight delays and cancellations earlier this year that resulted in a blame game between airlines and authorities. While acknowledging their own staffing issues, airlines have claimed that air traffic control staffing has exacerbated the situation while the DOT has argued that the situation is primarily the fault airlines and weather. Whatever the reason, the regulator has moved to improve airline passenger protections, including a new rule that would guarantee cash refunds.

View the Airline Customer Service Dashboard

Transport

Ex-Spirit CEO Ben Baldanza Thinks Electric Planes Face Huge Commercial Challenges

5 months ago

The future commercial use of electric vertical takeoff and landing vehicles, or eVTOLs, will be “highly challenging,” according to former Spirit Airlines CEO Ben Baldanza, who’s a fan of the technology’s potential, but thinks industrial and military applications would take place first.

The Archer Aviation Maker aircraft on its first flight in December 2021.

Baldanza, writing in Forbes about these helicopter-like electric vehicles, said they indeed face tech challenges regarding battery life, the intent to operate in congested areas, a lack of trained pilots, and the costs would preclude eVTOLs becoming a popular transportation alternative anytime soon.

Instead of carrying passengers, these electric flying vehicles would likely first see their initial applicability in carrying cargo and transporting packages, Baldanza wrote.

Transporting equipment during battles may also be an initial preferred use for electric vertical takeoff and landing vehicles, he wrote.

“Timing of flights likely would not conflict as much with other airspace uses, and utilization can be improved,” Baldanza wrote. “Also, industrial and military uses won’t be especially helpful in only the biggest metro areas, meaning that some issues will be easier to work out. This makes sense, and this eVTOL equipment will compete with smaller drones for some operations.”

Special purpose acquisition company mergers have been a popular funding mechanism for electric vertical takeoff and landing vehicles, Baldanza wrote, “even though revenue streams may be many years away.”

And Baldanza, who pioneered everything from charging for boarding passes to overhead bin space during his 11 years (2005 to 2016) as CEO of Spirit, knows a few things about revenue streams.

 

Airlines

Shareholder Group Recommends Against Spirit-Frontier Merger

7 months ago

Shareholder group Institutional Shareholder Services (ISS) is advising investors in Spirit Airlines to vote against a proposed merger with Frontier Airlines.

“The proposal from JetBlue appears to represent a superior alternative,” ISS said in a report Friday. “Shareholders are therefore recommended to vote AGAINST the proposed merger with Frontier.”

The recommendation is a reverse of ISS’ last advisory for a Frontier merger on June 24.

(Edward Russell/Skift)

Frontier CEO Barry Biffle, in a letter to Spirit CEO Ted Christie on July 10, said they were “very far” from garnering shareholder support for the Spirit-Frontier combination. He added that Frontier would not “propose any further modifications to the financial terms” of its merger proposal, which was valued at roughly $2.4 billion in cash and stock at the end of June.

JetBlue’s all-cash offer is valued at nearly $3.8 billion, including a $400 million reverse break-up fee.

Spirit, while it continues discussions with both Frontier and JetBlue, has repeatedly backed a merger with Frontier citing lower regulatory approval risk. The main concern is JetBlue’s unwillingness to offer to end its alliance with American Airlines in the northeast in exchange for antitrust approval. JetBlue has offered to divest all of Spirit’s assets in Boston and New York — the two markets covered by the American alliance — as well as gates at the Fort Lauderdale airport.

Spirit shareholders are scheduled to vote on the Frontier proposal on July 27.

Airlines

Fourth Delay to Spirit Airlines Merger Vote Following Frontier Concerns

7 months ago

Spirit Airlines has delayed — for a fourth time — a key shareholder vote on its proposed merger with Frontier Airlines, and by extension a hostile offer from JetBlue Airways.

The vote will now occur on July 27, nearly two-weeks later than the current July 15 date. Frontier CEO Barry Biffle asked Spirit to delay the vote on July 7, saying the airline’s offer was “very far” from shareholder approval.

In a letter to staff Wednesday, Spirit CEO Ted Christie acknowledged that the delay was in response to Frontier’s request. “There has been no change to our position at this time — the Spirit board has reiterated its commitment to the Frontier transaction and strongly recommends stockholders vote for the merger,” he said. Christie added that discussions continue with both Frontier and JetBlue.

JetBlue has wooed Spirit shareholders with its larger upfront cash offer for Spirit. The New York-based airline is offering a total of nearly $3.8 billion in cash for the carrier, whereas Frontier’s cash-and-stock offer totaled roughly $2.4 billion on June 27, according to a recent Raymond James analysis. Biffle, in his July 7 letter, said the airline does not intend to up its offer.

(Rene Hernandez/Flickr)

Airlines

Frontier Airlines CEO Concerned With Lack of Support for Spirit Deal

7 months ago

Frontier Airlines CEO Barry Biffle wants to make a deal for Spirit Airlines. But, in a letter sent to the CEO of Spirit Sunday, is concerned about the lack of support from both Spirit management and its shareholders.

“We still remain very far from obtaining approval from Spirit stockholders,” Biffle said in his letter to Spirit CEO Ted Christie and General Counsel and Secretary Thomas Canfield. He noted Spirit’s decision on July 7 to delay — again — a key shareholder vote on the Frontier deal by a week to July 15. Biffle requested an additional postponement of the vote to July 27.

Frontier, and its primary shareholder private equity firm Indigo Partners, does not intend to modify its latest offer that was made on June 24, Biffle added. The cash and stock deal is valued at roughly $2.4 billion, whereas JetBlue’s all-cash offer at nearly $3.8 billion, according to a Raymond James analysis.

“We also believe that the proxy solicitation process would unquestionably benefit from the board of directors of Spirit expressly reaffirming its recommendation of the pending merger with Frontier,” Biffle said. He asked that Spirit publicly back Frontier’s offer again within 10 days, or by July 20.

(Denver International Airport)

“Our proposed combination is not only pro-competitive — making it possible to bring ultra-low fares to more routes in competition with larger, high-cost, high-fare airlines — our offer delivers significantly greater value to Spirit stockholders,” Biffle reiterated in the letter.

Frontier and Spirit unveiled plans to merge in February, but the mutually agreed to deal was disrupted by an unsolicited bid from JetBlue Airways in April. The result has been a bidding war where, despite Spirit’s repeated support for the Frontier deal, JetBlue’s greater cash offer — regardless of regulatory approval risks — has repeatedly appeared to have the support from Spirit shareholders.

Airlines

Spirit Airlines Wins More Newark Flights After More Than 2 Year Fight

7 months ago

Spirit Airlines’ two-and-a-half year saga to expand at Newark Liberty International Airport has a happy ending. Late on Tuesday, the U.S. Department of Transportation awarded the discounter 16 peak “runway timings” — in short, rights to takeoff and land at an airport during a given hour — that Spirit sued for in December 2019.

The DOT said the award of the timings, which were only available to budget airlines, would boost “low-cost service options” and improve competition at the New York City-area airport. Alaska Airlines and JetBlue Airways also sought the takeoff and landing rights, according to the regulator.

(Friscocali/Flickr)

Newark is a major hub for United Airlines, which operates more than 70 percent of all flights at the airport. The timings were previously used by Southwest Airlines until the carrier ended flights to Newark in 2019. And Southwest acquired them in 2010 as a condition of United’s merger with Continental Airlines.

The award comes amid a three-way war of words between JetBlue, Spirit, and United over congestion at Newark. JetBlue and Spirit blame United, and the Federal Aviation Administration, for over scheduling the already congested airport, whereas United has repeatedly made the argument that its much smaller competitors were the problem. In June, United cut its schedule at Newark by roughly 50 daily flights from July 1 through the end of the summer to combat delays.

In an interesting twist, the DOT may need to re-award the timings if JetBlue wins its hostile bid for Spirit. The former carrier has pledged to divest all of Spirit’s assets in Boston and New York — including Newark — if shareholders approve its plan over a competing proposal from Frontier Airlines. Spirit shareholders vote on the Frontier proposal Friday.

Airlines

Spirit Airlines Delays Vote Again to Continue Merger Talks

7 months ago

For all who hoped for some resolution to the months-long saga over the future of Spirit Airlines on June 30, no go. The carrier has postponed a shareholder vote on a merger with Frontier Airlines to July 8.

Spirit will immediately open and close the June 30 meeting with no vote in order for its board to “continue discussions” with both preferred suitor Frontier and hostile bidder JetBlue Airways, the Florida-based discounter said late Wednesday. This is the second time Spirit has delayed a shareholder vote, which was first scheduled for June 10.

(Edward Russell/Skift)

Frontier is offering shareholders $4.13 plus 1.91 of its own shares for each Spirit share plus a $350 million reverse break-up fee, while JetBlue is offering at least $33.50 per share to up to $34.15 a share based on certain conditions and a $400 million break-up fee. All in, Frontier’s offer is worth $2.4 billion and JetBlue’s nearly $3.8 billion, according to an analysis by Raymond James.

The resulting airline from either a Spirit-Frontier or Spirit-JetBlue merger will be the fifth largest in the U.S. with a roughly 8 percent share of the market.

Airlines

JetBlue Ups Breakup Fee in Spirit Airlines Bidding War Move

7 months ago

JetBlue Airways is not done yet trying to acquire Spirit Airlines. With just three days until shareholders vote, the New York-based carrier has upped its offer again, raising its reverse breakup fee to $400 million to beat rival bidder Frontier Airlines.

JetBlue’s latest offer — its fourth for Spirit — also includes a prepayment of $2.50 per share of the breakup fee, and a “ticking fee mechanism” where the airline would pay Spirit shareholders an additional $0.10 per share monthly from January 2023 until the deal closed, JetBlue said Monday. The ticking fee could increase JetBlue’s overall offer to as much as $34.15 per share. Its last offer was for $33.50 per share plus a $350 million breakup fee.

(vic_206/Flickr)

“We’ve discussed our offer directly with Spirit shareholders and are now modifying our proposal in response to shareholders’ expressed interest, to include a monthly payment for shareholders, with the certainty of a significant cash premium at closing,” JetBlue CEO Robin Hayes said Monday.

And, in a letter directly to Spirit shareholders, Hayes said the airline’s board has “never negotiated with us and have now favored a transaction that better serves Frontier’s controlling shareholder than Spirit’s shareholders.”

Frontier’s latest offer, unveiled on June 24, included an additional $2 per share for a total of $4.13 a share, plus a $350 million reverse break up fee. The offer was valued at $2.7 billion based on closing stock prices that day.

Spirit shareholders will vote to accept or reject Frontier’s offer on June 30.

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