Skift Travel News Blog

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

Airlines

JetBlue Pilots Back Spirit Airlines Merger

7 months ago

Pilots at JetBlue Airways are the latest to back the carrier’s proposed $3.8 billion merger with Spirit Airlines. The combination, if it wins antitrust approval, would create the fifth largest airline in the U.S.

The decision to support the merger was recently approved by the JetBlue chapter of the Air Line Pilots Association (ALPA), which represents pilots at the airline. ALPA also represents pilots at Spirit, however, the support is limited to the union’s JetBlue chapter at this time.

“The financial and market strength of the combined carrier represents an historic opportunity to protect and advance the careers of JetBlue pilots through the continued growth of the airline,” JetBlue ALPA Chapter President Captain Chris Kenney wrote in a motion viewed by Skift and approved by the union’s board on Tuesday.

(Ryan McLean/Flickr)

Whether the pilots backing will get the JetBlue-Spirit merger over the line is unclear. The U.S. Department of Justice has sued to block the deal on competitive grounds, and a trial is scheduled to begin in October. The regulator argues that the combination would eliminate a competitor from the market that drives airfares down, which could hurt consumers.

A recent accidental disclosure in a separate civil suit to block the merger provided evidence that supports the DOJ’s argument. Lawyers for the plaintiff, in an incorrectly redacted summary of JetBlue internal documents, said the airline plans to raise airfares 24-40% on Spirit routes. JetBlue has denied the disclosure, and said that it was an “inaccurate picture of the facts.”

The backing of ALPA’s JetBlue chapter comes the same week that the airline reached a deal to divest Spirit’s assets in Boston and Newark to Allegiant Air if the merger happens. The aim is to reduce antitrust concerns at the key airports. JetBlue will also work with the operator of the Fort Lauderdale airport to make five gates used by Spirit there available to Allegiant.

ALPA is the second labor group to back the deal after the Association of Flight Attendants-CWA, which represents cabin crew members at Spirit, opted to support it in February.

Airlines

JetBlue Begins Winding Down American Airlines Alliance

9 months ago

JetBlue Airways and American Airlines will begin winding down their alliance in the northeast in a week’s time, or on July 21. That’s when the carriers will stop taking new reservations under the pact, which a federal judge ruled violated U.S. antitrust law in May.

Existing itineraries that include American and JetBlue flights for travel after July 21 will be honored, but new bookings will not be made, New York-based JetBlue said Friday. Travelers can also accrue loyalty program points after that date as long as their either American AAdvantage or JetBlue TrueBlue number is on their reservation prior to the cutoff date.

“We are still committed to minimizing disruption to existing travel plans and continuing to deliver great value and our award-winning product and service to our customers,” JetBlue Vice President of the Northeast Alliance Dave Fintzen said.

An American aircraft flies past JetBlue and United aircraft as it lands at Washington’s Reagan National Airport. (REUTERS/Joshua Roberts)

The strategy, to stop taking new reservations but honor existing ones, is similar to the way American and US Airways integrated their reservations systems in 2014. The process is known as a “drain down,” where the number of existing bookings gradually drain out of the system as no new reservations are taken. The method avoided any major integration snafu when American and US Airways merged.

However, numerous details of how American and JetBlue end their alliance remain unknown. These include how JetBlue returns slots at the New York-area airports that it leased from American, how the airlines recover divested slots at Washington’s Reagan National airport, and potential gate relocations at certain airports.

JetBlue announced plans to end the alliance earlier in July. It cited a desire to focus on its proposed merger with Spirit Airlines for the decision. American, on the other hand, still intends to appeal U.S. District Court Judge Leo Sorokin’s decision. Sorokin has yet to set a deadline for the airlines to unwind their alliance, but has indicated that a request by the airlines for 120 days was “too long.”

The U.S. Justice Department has challenged JetBlue’s merger with Spirit, as it did the alliance. That case is scheduled to go to trial in October. Wall Street analysts generally see JetBlue’s decision to end its alliance with American as a positive for the proposed merger, though on the margin given the DOJ’s case against the deal.

Airlines

JetBlue to End American Alliance to Focus on Spirit Merger Approval

10 months ago

JetBlue Airways will not fight to save its alliance with American Airlines in the northeastern U.S., following a judge’s ruling that the pact violated U.S. antitrust law and must be unwound. Instead, JetBlue will shift its focus to securing approval for its proposed merger with Spirit Airlines.

“Despite our deep conviction in the procompetitive benefits of the NEA, after much consideration, JetBlue has made the difficult decision not to appeal the court’s determination that the NEA cannot continue,” the New York-based airline said Wednesday. The NEA refers to the name of the partnership, the Northeast Alliance.

American, in a separate statement Wednesday, said that it maintains plans to appeal the ruling but respects JetBlue’s decision. It will work with the airline to “seamlessly” end the alliance.

American and JetBlue will end their alliance in the coming months. (Glenn Beltz/Flickr)

American and JetBlue will unwind their partnership over the coming months. The pact is wide ranging including a codeshare partnership in Boston and New York, slot leases at busy New York LaGuardia and JFK airports, a loyalty tie up, and revenue sharing mechanism on joint routes. It even included the divestment of select slots at Washington’s Reagan National airport, which Southwest Airlines recently acquired.

The timeline suggests that the busy summer travel season, which typically ends after the U.S. Labor Day holiday in early September, will be unaffected by JetBlue’s decision to end the alliance. However, the judge in the case could alter the timeline at a hearing scheduled for July 26.

JetBlue still has a fight ahead. Ending the American alliance is not a guaranteed path to the U.S. Justice Department changing its view and approving its merger with Spirit. The regulator has previously indicated that it has concerns about the merger even without the JetBlue-American partnership, and many viewed the alliance as a key bargaining chip in JetBlue’s negotiations with the DOJ. The regulator sued to block the combination in March; a court date is set for October.

“The DOJ should reconsider and support our plan to bring a national low-fare competitor to the Big Four,” JetBlue said Wednesday. “We are open to working with the DOJ to address any remaining concerns they have.”

The JetBlue-Spirit merger would create the fifth largest airline in the U.S. ahead of Alaska Airlines. The combination has the support of the state of Florida, as well as the Association of Flight Attendants-CWA.

Airlines

California, New Jersey Join Suit to Block JetBlue-Spirit Merger

1 year ago

The U.S. Department of Justice is gathering support for its suit to block the $3.8 billion merger of JetBlue Airways and Spirit Airlines. The attorney generals of California, Maryland, New Jersey, and North Carolina signed on to the antitrust regulator’s lawsuit on Friday, the DOJ said in a statement.

Massachusetts, New York, and Washington, D.C., were already parties in the suit that the DOJ filed in the U.S. District Court for the District of Massachusetts on March 7. Principal Deputy Assistant Attorney General Doha Mekki said Friday that the additional state support would help the regulator “protect the benefits of competition in the airline industry on behalf of their residents.”

A JetBlue plane taxis past the control tower at San Juan airport
A JetBlue plane at the airport in San Juan.

The merger of JetBlue and Spirit would create the fifth largest U.S. airline by passenger numbers, with a roughly 8 percent share of the domestic market.

Not every state opposes the combination. The attorney general of Florida backed the merger after securing a commitment from JetBlue, which would acquire Spirit, to add flights in the state, including to underserved destinations in Florida, like capital Tallahassee, and to Europe.

An out-of-court settlement between the DOJ and airlines remains a possibility. However, U.S. Attorney General Merrick Garland has said that the combined JetBlue-Spirit “still violates” antitrust law even if the former were to give up what is arguable its strongest bargaining chip, its alliance with American Airlines.

The DOJ’s suit is scheduled to go to trial in a Massachusetts courtroom on October 16.

Airlines

Largest Flight Attendants Union Backs JetBlue-Spirit Merger

1 year ago

The largest flight attendants union, the Association of Flight Attendants-CWA, is backing the proposed $3.8 billion merger of JetBlue Airways and Spirit Airlines as part of a new agreement with the latter carrier.

“The JetBlue-Spirit merger adds competition to the airline industry that creates more power for workers, along with choice and comfort that benefits consumers,” AFA President Sara Nelson said Tuesday. “We urge regulators to work diligently to ensure the financial merger closing occurs in the near term so that flight attendants, other workers, and consumers can access the benefits of the merger as soon as possible.”

AFA represents the roughly 5,600 flight attendants at Spirit. JetBlue’s more than 4,800 flight attendants are represented by the Transport Workers Union, or TWU.

A Spirit Airlines flight attendant
(Spirit Airlines)

Labor support for the merger is not a guarantee that the U.S. Department of Justice, which handles antitrust matters, will approve the deal. Reports indicate that the regulator intends to block the JetBlue-Spirit combination, and JetBlue CEO Robin Hayes said Tuesday that the carrier was ready “to go to court” if it had too to get the deal done.

However, labor backing of a merger can make the integration process go more smoothly once the deal closes.

AFA’s support for the merger came as part of a new two-year accord with Spirit. The tentative agreement, which flight attendants still must vote on, also includes pay raises of 10-27 percent upon ratification.

Airlines

U.S. Expected to Block JetBlue-Spirit Merger: Report

1 year ago

The U.S. Department of Justice is expected to sue to block the proposed merger of JetBlue Airways and Spirit Airlines, Politico reported late Friday.

The move was not unexpected given the Biden administration’s public position against large mergers in already consolidated industries. Four airlines — American, Delta, Southwest, and United — control nearly 80 percent of the U.S. market.

JetBlue has argued that its deal to buy Spirit for $3.8 billion would create a stronger competitor to its big four competitors. The combined carriers would have roughly a 9 percent share of U.S. domestic traffic, and be the fifth largest in the country. On Thursday, JetBlue outlined at least eight new routes the combined airlines could potentially add.

“This isn’t Pepsi and Coke merging,” JetBlue President and Chief Operating Officer Joanna Geraghty told Reuters on Wednesday.

The DOJ’s suit, which Politico reported could come as soon as March, is not necessarily the end of the deal. The regulator similarly moved to block the merger of American and US Airways in 2013 before reaching an out-of-court settlement that allowed the merger to go forward several months later.

Spirit shareholders approved the deal in October, after JetBlue beat Frontier Airlines in a bidding war for Spirit last July.

Airlines

Spirit Airlines Shareholders Approve JetBlue Merger

2 years 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

Frontier Airlines Prospects Rise With JetBlue-Spirit Deal

2 years ago

Frontier Airlines CEO Barry Biffle thinks his airline’s outlook is better than ever after JetBlue Airways beat it in a bidding war for budget competitor Spirit Airlines.

“Ninety-five percent of U.S. capacity will be 30 to 80 percent higher cost than us,” Biffle said in an interview Thursday. One of his main focuses at Frontier is using low costs as a competitive advantage and, by JetBlue buying Spirit and bringing it up to the former’s cost levels, many see the deal as an elimination of Frontier’s main low-cost competitor in the U.S.

Airlines compare their expenses using the metric unit costs — measured by costs per available seat mile — excluding fuel. In the second quarter, Frontier’s unit costs excluding fuel were 7.24 cents, Spirit’s were 6.96 cents, and JetBlue’s were 9.68 cents. Put another way, JetBlue’s costs are 33 percent higher than those at Frontier. The combination of JetBlue and Spirit will leave Frontier as one of the only airlines serving major markets with very low costs in the U.S.

Frontier Airlines
(David Zalubowski/Associated Press)

Asked about potential cost pressure from new pilot pay deals at certain U.S. regional airlines, Biffle was unconcerned and said Frontier can offer cockpit crew members better pay over their career, as well as a better work-life balance than the regionals can. Frontier, he added, is in “good shape” when it comes to a supply of pilots.

With low costs in mind, Frontier is moving ahead with aggressive expansion plans. The airline intends to grow capacity by double digits annually through the end of the decade, Biffle said. Frontier aims to triple in size by 2030.

Airlines

JetBlue and Spirit Airlines Set October Date for Merger Vote

2 years 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

Shareholder Group Recommends Against Spirit-Frontier Merger

2 years 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.