The company's sprawling factory in Renton, Washington is a hive of activity on this sunny Wednesday, March 28, 2019, during a tightly-managed media tour as Boeing tries to communicate confidence that it has nothing to hide. Airline acquisition stories are always intriguing, like the perpetual rumor that Warren Buffett would buy Southwest (he does own about 10.2%.) So, yes, there are plenty of merger possibilities, but it is unclear if the next one will be expected (Frontier-Spirit) or something that few saw coming (like Alaska's acquisition of Virgin America). Herb is probably twitching in his grave even hearing someone mention it! We should all know by now nothing is ever in inevitable. Alaska Air is also a 737 operator, but that doesn't make it a great merger partner for Southwest Airlines. Downdetector only reports an incident when the number of problem reports is significantly higher than the typical volume for that time of day. Neither the U.S. Department of Transportation nor A4A maintains official records of airline M&A activity. Most international servicegone. BNA-SEA, PDX-MSY etc). Please don't sabotage your own union's efforts on your behalf. Southwest is probably also large enough to fit in this too-big-to-merge category. The real reason why Southwest CEO Gary Kelly is so eager to reach new labor contracts probably has a lot more to do with a desire to keep operations smooth in a period when Southwest Airlines is earning record profits. Why a merger doesn't make senseHistorically, one of Southwest's main tools for keeping costs down has been operating a single fleet type: the Boeing 737. Given that Southwest's management just put in a lot of time, money, and effort to manage a transition back to an all-737 fleet, the idea that it will blow up this work by buying JetBlue or Hawaiian Airlines is far-fetched, to say the least. Most major airlines are in negotiations at this time, and many are contentious. It would quickly give WN a dual fleet and a large presence in Central and South America, which they want. If we do see more deals ahead, they probably will come primarily from smaller carriers bulking up. Alaska Airlines continuously ranks number 1 in customer satisfaction, despite the criticism of their first class (you dont absolutely need to lay flat during a 4 1/2 hour flight). A combined Southwest and JetBlue would have a solid 25% share of U.S. domestic traffic, based on DOT data for 2018. That would be a more reasonably sized candidate than AS or B6. As a subscriber, you have 10 gift articles to give each month. Classless Southwest Hawaii Review SJC to LIH: Quirky, Unique, How Some Tourists are Ruining Hawaii Travel for Everyone, Stunned! Also, Southwest probably bit off more than they could chew when they acquired AirTran. Alaska is not a fan of Airbus with exception of A321. Airline industry has a lot to ponder with what they just went through/pandemic. But the deal would eliminate their competition on competitive routes, potentially hurting cost-conscious travelers. Southwest needs to diversify its fleet away from the 737," wrote Baker on Tuesday. Will miss the @united #globalfirstlounge at #ord. If anyone on our team wouldnt recommend it to a friend or a family member, we wouldnt recommend it on The Points Guy either. "[Southwest] wants to be prepared for opportunities in what has historically been an opportunity-rich industry," DeNardi wrote. Alison Brown could just predict this for me so I know which one of my favorite be going and Im just glad to be on the side and a man thank you moving forward positively! We have been contacted by major union legal teams regarding this issue. Southwest Airlines Bets on New York LaGuardia Following Newark Exit, Southwests 737-700s Among Jets Sticking Around Longer Because of the MAX, Do Not Sell or Share My Personal Information. JetBlue was looking for a merger as well. I am one example of many I am sure. The tentative agreement would have kept Southwest's flight attendants at the top of the industry in pay and benefits, according to the company. Major unions have lost court cases and in one instance suffered severe financial damage in the process. More concerningly, JetBlue recently trimmed service to destinations like Mexico City and the Caribbean, while canceling service at Oakland, CA and cutting service to Long Beach. For whatever reason, many flight attendants have come to the conclusion that Southwest is particularly keen to get a contract ratified because it is shopping around for a new merger partner and wants to get its own house in order beforehand. Alaska could cost close to 10 times that amount, given that its market cap is already $9.7 billion and a merger premium would be necessary. Keeping flight attendants and pilots on hand will be easy everybodys qualified. However, DeNardi says that on Southwests October earnings call, CEO Kelly was surprisingly candid about plans to formally reconsider Southwest's single-fleet type strategy. DeNardi believes that Boeings woes materially increase the likelihood that Southwest diversify its fleet., Southwest Airlines Boeing 737 MAX aircraft are parked on the tarmac after being grounded, at the [+] Southern California Logistics Airport in Victorville, California on March 28, 2019. If Southwest buys JetBlue, it will also get its place in line for A321neo deliveries. Under either deal, the new larger airline would have more market power in certain cities, particularly in Florida, a popular destination where all three airlines compete. The new rumor is an old one, but at a new, more opportune time -- Alaska is in the sights of SWA. No, but we agree it increases with every month that Southwests growth ambitions remain neutered.". AirTran earned $250 million in fees . 717sgone. The credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. Not sure anyone would or should pay it. The Chicago Business Journal is reporting that Southwest CEO Gary Kelly appears to be in the acquisition mode, and Hawaii may not be far from his thoughts and plans. However, it is highly unlikely that Southwest Airlines is thinking about any merger. Boeing helped push the entire stock market down on January 21 stating it does not expect to get FAA approval for the return of the 737 MAX to service until mid-year due to further potential developments in the certification process and regulatory scrutiny on its flight control system. Third, one thing the AirTran merger showed us was Southwests distaste for operating multiple fleet types. Southwest grew tremendously internationally after acquiring AirTran. (Photo by Michael Tullberg/Getty Images). American Airlines. At the start of 2019, Southwest expected deliveries of 44 737 MAX for a net increase of about 25 aircraft after planned retirements. Anyone can read what you share. There were significant differences in those areas in both cases. From an operational perspective, it seems that Alaska would make more sense since they have a lot more Boeing aircraft. In terms of market share, JetBlue had a 28% share of passengers at Boston Logan (BOS) and a nearly 13% share of passengers at the three New York City airports -- John F. Kennedy (JFK), LaGuardia (LGA) and Newark (EWR) -- in 2018, according to U.S. Department of Transportation data via Diio by Cirium. For example, executives from Southwest visited Airbus to check out the A220 as early as April, reported The Air Current. I feel like Southwest does have red eyes flights. It is against the APC Forum Rules to advocate any labor action which is not authorized by the RLA/NMB. Certain hotels have resort fees. But some analysts are not sure that airlines can easily reap the rewards of bigness through mergers. But that number which was eye-popping when released may be conservative. Since the industry was deregulated in the late 1970s, airlines have undergone successive waves of consolidation as they sought first regional, national and then international strength. JetBlue similarly tries to keep costs low but tries to distinguish itself by offering more legroom and free wireless internet in flight. It would let Sun Country go away gracefully although it really doesnt deserve such a decent demise. 'Blue was outbid by Alaska, but the move did show that the carrier is open to the possibility of merging its operation with another airline. Thus, Southwest will merge or acquire another carrier in order to stem the flow to its competition. One obvious stumbling block: Southwest has exclusively operated Boeing 737 aircraft over its 50-year history, while JetBlue is essentially an all-Airbus (plus Embraer regional jets) airline. "Do we consider near-term [mergers and acquisitions] as the leading probability? 15 Surprising Reasons To Use a Travel Advisor for Your Next Trip, American Queen Voyages - Deeply Discover the Difference, Copyright 2023 Northstar Travel Media, LLC. Hawaiian Airlines flies a mixed fleet including 717s, two different types of widebodies, and also contracts out for regional flights on ATR turboprops. I cannot see that happening with Alaskas route network, lounge network, fleet, and onboard cabin. With Spirit being smaller (and among the most disliked airlines in America, BTW), I think its an easier sell. In Q2 WN had the highest net margin DESPITE the issues with the MAX. The perfect @flysas name tag for #Longyearben! Online posts, including anonymous posts and posts made here on APC, have been used in lawsuits against unions. And, it would also put itself in a position to be a market share consolidator in the post-pandemic recovery. All rights reserved. The merger, valued at $6.6 billion, would create the fifth-largest U.S. airline carrier and is slated to close in the second half of 2022. Hawaiian Airlines First Class Lie-Flat Review, Hawaiian Joins Mid-Air Diversions | Now 7 In Three Weeks, Within 48-Hours, 3 Alaska Air Hawaii Flights Divert Over Pacific. A total of 2 acquisitions came from private equity firms. This all-737 strategy is a big barrier to any further merger attempts at Southwest. The Company's most targeted sectors include airlines (75%) and aerospace (25%).. Join Mergr and gain access to Southwest . Southwest Airlines is back to an all-737 aircraft fleet. For one, the market cap of JetBlue is nearly $5.4B (vs just $2.9B for Spirit). Photo: The Motley Fool. In the meantime, the 737 MAX continues to drag on Southwest. Integrating another airline via acquisition can be time-consuming and difficult. The aircraft are different, of course, which would require training and logistical upgrades. The company and powers that employs & also has a very tight/strict requirements guidelines with customer service. Alaskas F model (standard domestic F) is totally different from Jet Blues (transcon lie flats and all-Y just like Southwest), and t FF programs are also totally different (if anything Rapid Rewards is closer to Mosaic), so I dont see why thats a barrier for one but not the other. (Spirits board originally preferred a deal paid for in stock, according to regulatory filings, but shares of Frontier have fallen since the deal was announced.) Update: This story has been updated to reflect Spirit and Frontier's announcement of a planned merger. The lounges are something NEITHER Jet Blue and Southwest do. Hawaiian serves its namesake state from . . So I dont get how Southwest is incompatible but Jet Blue is. While obviously a smaller number of aircraft, the A321neo does offer about 25% more seats than the MAX8, and so could address much of Southwests capacity growth needs. It charges extra for seat selection and carry-on baggage and packs seats close together. Plus, earn an additional Free Night Award after you spend $60K in purchases on your Card in a calendar year. It is common for some problems to be reported throughout the day. Those three airlines have a 3% market share, maybe a little more now since they are so domestic. For such reasons, a deal is unlikely to happen. The current deals appear to be about quickly bulking up. For an explanation of our Advertising Policy, visit. Opinions expressed here are the authors alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities. makes WN a player in MSP also. JetBlues routes are not necessarily complementary with Southwests, although an acquisition would give Southwest access to the London routes JetBlue promises to launch in 2021. We may receive compensation when you click on links to those products. None of those MAX deliveries are flying, and the airline has scrambled to keep some aircraft slated for retirement around a bit longer. This requires amenities like first class seats and airport lounges that don't exist at Southwest. Explore It is reasonable that a beefier No. Southwest Airlines is profitable but has a growth problem created by the continued grounding of its 34 Boeing 737 MAX aircraft (of 310 on order). Fearing this, Stifel, a major investment banking firm, downgraded Southwest yesterday with the following warning: An acquisition by Southwest motivated by a desire to diversify away from the Max creates significant risks in the near term for LUV. It has also divested 1 asset. This review, however, would explore whether there is a unique rivalry among the lower-cost carriers that is deserving of protection by the Justice Department. For example, last summer Southwest dropped service to Newark (EWR) and 9 million New Jersey residents, citing the continued grounding of the MAX. JetBlue had firm orders for 153 Airbus aircraft -- 70 A220-300s and 83 A321neos -- with delivery slots through 2026 at the end of September, its latest fleet plan shows. However, gaining the terminal at JFK (which would be an extremely valuable gateway to Europe) would be the boon. Would make more sense than any other merger. "seniority_list" merger integration software, Do Not Sell or Share My Personal Information. Landing at the wrong airport would be terrible, and some people who have used Southwest Airlines know exactly how that feels. Fourth, buying Alaska would also mean having to deal with the regional operation. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. This applies to ANY wildcat actions, including slowdown, work-to-rules, withdrawal of enthusiasm (WOE), sickouts, etc. The prospect of a hypothetical merger between Southwest Airlines and JetBlue Airways piqued the interest of aviation observers on Monday. Pretty sure he is on the record as saying it didnt work well. Please view our advertising policy page for more information. Third, Alaska Air would be an extremely pricey acquisition. All contract under the jet labor. However, this deal would likely not go forward until Frontier goes public, something that is in the works but has not yet taken place. Watch Yahoo Finances live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Could Southwest get out of the box by buying JetBluein particular, that airlines order book of Airbus A321neo aircraft? Michael Goldstein is a journalist and playwright based in Los Angeles. Our points-obsessed staff uses a plethora of credit cards on a daily basis. Concerns over new strains of the coronavirus have amplified the concerns on travel demand. exactly how dumb are those management folks at Love Field ? Its not necessarily an amazing strategy (Alaska has the same basic problem with future growth and the MAX), but its arguably more viable than two airlines merging that would yield a dumbbell shaped network that doesnt have a hub or a focus city more than five miles from a coastline- Southwest, unlike Alaska and Jet Blue, actually doesnt treat flyover country like a joke and a spoke (and Alaska at Love Field is a joke). It is the first merger of large U.S. airlines since. Spotted four #polarbear outside of #longyearbyen -, One of the best crews I have ever had the pleasure, Next stop ARN! We have been contacted by major union legal teams regarding this issue. From a single cabin of service to free checked baggage to no redeyes to an aversion to aircraft diversity, Southwest is a lone star airline that dances to the beat of a different drum. JetBlue also has a mixed fleet, which consists of A320s and E190s. Tie-6. But Spirits ultracheap fares may not survive because JetBlue tends to cater to more affluent travelers and has been expanding premium services like business-class seats. It would seem as if Southwest Airlines has a much stronger clientele base. Does DeNardis analysis hold water? Antitrust regulators will have to sign off on either proposed deal involving Spirit Airlines. The table is provided as a service rather than an authoritative source. At nearly every level, the business models of JetBlue and Alaska are different than Southwests. . The next largest carrier, American Airlines, had a 22% share. structures, with completely different company cultures, said Robert Mann, an industry analyst and consultant. Publicly, Southwest remains upbeat, stating We remain confident that, once certified by the FAA, the enhancements will support the safe operation of the MAX., DeNardi, however, says, Over the last few months, there have been several data points which suggest that Southwest's capacity plans will be impacted more significantly and for a longer duration than previously expectedAs a result, we now see M&A as more likely (70% vs. 50% previously).. Labor relations would be much more contentious (I think Spirit Pilots would jump at the chance to fly under the SWA contract seniority list integrations always being contentious). We're not sure if what is being reported in the Journal article is correct or it is just a slow news day in civil aviation. Great if Alaska purchased Jet blue w/bonus of gaining more routes East Coast. - After two fatal crashes in five months, Boeing is trying hard -- very hard -- to present itself as unfazed by the crisis that surrounds the company. In addition, Frontier and Spirit have been criticized for poor customer service, and Phil Weiser, the attorney general of Colorado, where Frontier is based, warned federal regulators last month that the merger creates a real and pressing risk that service could worsen if the two companies merged. When the dust settled on a big round of airline consolidation nearly a decade ago, four large companies came to dominate the industry. Credit ranges are a variation of FICO Score 8, one of many types of credit scores lenders may use when considering your credit card application. By logging into your account, you agree to our. Agree. The theory goes something like this. 2013 - Formed by merger of Aeroflot subsidiaries SAT Airlines and Vladivostok Air. (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP/Getty Images). And the easiest way to grow at many airports is to buy another airline that has gates and takeoff and landing slots. Lastly I strongly suspect this story is being driven more by analysts who love mergers and love pushing mergers than by anyone at Southwest themselves. The rules here have not changed, but the enforcement will now result in a 30 day ban from APC for violations. Report Suggests Frontier Airlines Is Going Public, Selling Groups, family and Adventure Travel. The company's sprawling factory in Renton, Washington is a hive of activity on this sunny Wednesday, March 28, 2019, during a tightly-managed media tour as Boeing tries to communicate confidence that it has nothing to hide. You'll earn 15 elite night credits each calendar year, and receive automatic Gold elite status. Consider the Alaska/Virgin American merger or Southwest/AirTran. 75235 Southwest Airlines Unveils Imua One, A High-flying Tribute, with Gratitude to Southwest Employees and the People in Hawaii They Serve Apr 28, 2023 -Southwest Airlines Co. (NYSE: LUV) today, on the anniversary of its first interisland flights within Hawaii, commemorates beginning a fifth year of serving the Aloha State by introducing Imua One, a Hawaii-themed aircraft livery that symbolizes . Southwest was formed in 1967 and is based in Dallas, Texas. Melinda Gates: we are giving $250 million more to the COVID-19 relief effort, Olympics great Michael Phelps: the COVID-19 pandemic hasnt been all smiles for me, HP CEO: heres how our business is trending during the pandemic, Lululemon founder: retail will rally back after the pandemic, Walmart CEO: the lack of stimulus is taking its toll, Senator Ted Cruz: big tech is drunk on power. Passenger Airlines, U.S. Government-Imposed Taxes on Air Transportation, U.S. Federal (or Federally Approved) Aviation Tax Collections, A4A Presentation: Industry Review and Outlook, Current Operation Status for U.S. READ MORE: Report Suggests Frontier Airlines Is Going Public. Dallas, Texas This Southwest Airlines merger talk simply seems to be a case of the rumor mill run amok. However the merger rumors play out in the weeks and months to come, Southwest flight attendants are planning to get back to the negotiating table, perhaps as early as mid-August, sources indicated. And the Biden administration is uniquely focused on the impact of corporate deals on economic inequality by, for example, raising fares and suppressing wages. Its comical to read people discredit Alaskas success; they have proven to be the competitive underdogs, especially by purchasing Virgin America, a company that was also a 180 from the traditional carrier. A brewing fight over the future of the budget carrier Spirit Airlines may give rise to a credible, albeit still smaller, competitor to the industrys giants. are down on average 36% over the past year. Alaska has a completely incompatible culture to include not hiring pilots if they use nicotine. Seems like an awfully expensive way to solve what their management should hope is a shorter-term issue. To make the world smarter, happier, and richer. There haven't really been any recent rumors about a deal between Hawaiian Airlines and JetBlue, but it does seem like a match that could work. DeNardi, however, is not the first to pose such a question. Southwest has acquired in 4 different US states. Consumers could benefit from a better flying experience thanks to the perks that JetBlue offers. All Rights Reserved. Check here before booking an award fare. Mergers in the airline industry have led to higher prices for consumers and lower wages for workers, and the Justice Department needs to closely scrutinize these proposed deals and challenge them if necessary, she said in a statement to The New York Times this week, echoing a letter she and other lawmakers sent to regulators last month about the Frontier-Spirit deal. Still, it's hardly a match made in heaven. But even this schedule change was before Boeings latest disastrous 737 MAX announcement. Sell side analysts and their version of click bait. There are simply too many antitrust issues. Boeing gathered hundreds of pilots and reporters to unveil the changes to the MCAS stall prevention system, which has been implicated in the crashes in Ethiopia and Indonesia, as part of a charm offensive to restore the company's reputation. Smaller operator, all 737. He says that JetBlue has approximately 15. Look, I am sure the executives in Dallas are seriously rethinking their one aircraft type strategy BECAUSE of the Max. It will never happen. Related:Southwests 737-700s Among Jets Sticking Around Longer Because of the MAX, "Southwest needs aircraft. Anything is possible in the airline industry. Excerpts and links may be used, provided that full and clear credit is given to Live and Let's Fly with appropriate and specific directions to the original content. Rumors that, if correct, could dramatically change the playing field in Hawaii travel. They want to know how a proposed merger affects travelers, including whether the combined company will be able to significantly raise fares on routes where the two companies previously competed head-to-head. Receive a 7% discount off standard rates for reservations of standard guest rooms at hotels that participate in the Marriott Bonvoy program when you book directly. I am so excited tha, I greatly miss the @lufthansa #747-8 at @flylaxair. Regarding JetBlue, acquiring them would have significant value for sure, but would be much more challenging. Yes they can unwind those contracts over time but until they do their business model has just changed dramatically. Diana Moss, the president of the American Antitrust Institute, a left-leaning organization that has long called for tougher enforcement of competition laws, has asked the Justice Department to block the Spirit-Frontier deal. Spirit has about 140 planes (all AirBus) with 100 320 neo orders and 50 options through 2027 thats a lot of growth potential. (Photo by FG/Bauer-Griffin/GC Images), conference at Southwest Airlines headquarters on April 17, 2018 in Dallas, Texas. The new United Polaris Lounge at Washington Dulles, @malaysiaairlines just announced it would retire i, Welcome to @fly_bur @aveloair! Southwest has over 100 737 MAX on order, with growth plans built around that aircraft. Learn More. WN is interested in larger airplanes now, so the A220 isnt a priority where the 320/321 would rank high. All Rights Reserved. If anything, United and JetBlue (with their massive Orlando expansions) would be a far better fit. At this point, Buffett, 89, will have to pull the trigger soon, if only to catch up with fellow octogenarian Phil Ruffin on the acquisition front. I recently spent a weekend at the @ventanabigsur. The next couple of years will be interesting. Refund policy Change or cancel your flight Flight credits Overbooking Procedures Transferable Flight Credit Same-day change and Same-day standby. The union says the merger will also create more competition against four airlines that currently occupy 81% of the aviation industry, American, Delta, Southwest and United. Whether Spirit ends up merging with Frontier or JetBlue, the combined company could pose a more formidable threat to the nation's four largest airlines American Airlines, Delta Air Lines,. The Motley Fool has no position in any of the stocks mentioned. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, and reddit. Cost basis and return based on previous market day close. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright document.write(new Date().getFullYear()) Live and Let's Fly All Rights Reserved.Unauthorized use and/or duplication of this material without express and written permission from this sites author and/or owner is strictly prohibited. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Southwest expected 44 MAX deliveries in 2019, 38 in 2020, 44 in 2021 and 41 in 2022, for a hoped-for growth of 3-5% annually, according to DeNardi. Josh Lew writes about travel, nature, special events and interesting places. At the end of the day thats what this is all about Customer service people want to be treated like theyre special especially when theyre going on a special vacation or even a meetinglife events. The U.S. Justice Department, which would have to approve such a deal, is likely to raise concerns on the impact to consumers from a merger. With a complimentary route map and compatible fleet, and regardless of AS' financial status, it all seems to click. JetBlue Airways this week made its own bid, of $3.6 billion, for Spirit, which said late Thursday night that it would consider the proposal. Frontier Airlines has single cabins. brilliant suggestion. https://www.forbes.com/advisor/author/brandon-bycer/, https://www.forbes.com/advisor/author/hjohnson/. (Photo by Stewart F. House/Getty Images), Southern California Logistics Airport in Victorville, California on March 28, 2019. That said, as Baker pointed out, Southwest's lack of fees and expanding that practice to JetBlue could be looked at positively by the regulator. The combo would, in one fell swoop, catapult Southwest to a strong market-leading position domestically, strengthen its network in the Northeast and to the Caribbean and Latin America, and provide it with an Airbus fleet and robust order book that would diversify its all-Boeing 737 fleet. When Alaska Airlines bought the much smaller Virgin America in 2016, it took three years just to repaint all the planes. provides, concessions can be made., Bidding War for Spirit Could Undercut Power of Four Big Airlines, https://www.nytimes.com/2022/04/08/business/spirit-airlines-jetblue-frontier.html. The department is seeking to nullify an alliance between JetBlue and American in the Northeast, a deal that one official described last year as a de facto merger. The agency said in its lawsuit that American, the largest airline in the country, would use the partnership to co-opt a uniquely disruptive competitor. JetBlue and American deny that their deal is anticompetitive and are fighting the case in court. Either proposed merger would also require the approval of antitrust regulators who under President Biden have been emboldened to challenge deals that might have sailed through in previous administrations. The airlines reported $117 million and $473 million net losses, respectively, in 2021 on Monday. A merger between Frontier, which is concentrated in the West, and Spirit, which is concentrated in the East, would create a larger national budget airline that could pressure bigger carriers to drop fares in more cities. JetBlues stock has fallen more than 10 percent since The Times reported its offer for Spirit in part because investors are unsure of JetBlues ability to fully take advantage of the acquisition.
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