PO Box 36611, Southwest Airlines could use JetBlue, but a merger is unlikely many are wondering which airlines will be the next to consolidate. Not sure anyone would or should pay it. It said this week that it was reviewing JetBlues unsolicited bid. Concerns over new strains of the coronavirus have amplified the concerns on travel demand. Cash is primarily being used to fund the losses being driven by the plunge in demand and high structural costs (see airplane maintenance, unionized employees, etc.). He added that the possibility of non-organic growth was larger than the MAX and a "huge, strategic question.". Even for Southwest Airlines -- the smallest of the top four U.S. airlines -- attempting to buy a competitor the size of JetBlue or Alaska (both of which had more than $5 billion of revenue last year) would almost certainly invite antitrust scrutiny. Such a partnership has been the subject of speculation since well before the Alaska-Virgin deal. You'll earn 15 elite night credits each calendar year, and receive automatic Gold elite status. CANADA (EN), Hes previously published some provocative research, noting that the value of American Airlines loyalty program was worth more than the airline. It tried to buy Virgin America, but lost that deal to Alaska Airlines. I just don't see it happening. JetBlue also has a mixed fleet, which consists of A320s and E190s. Great if Alaska purchased Jet blue w/bonus of gaining more routes East Coast. Yes, they would not get 100, just maybe 30, but that would get what they want and finally put the nail in the coffin of Sun Country in a good way. The table below is an unofficial compilation of completed (not merely proposed) mergers and acquisitions since the inception of the U.S. airline industry. Southwest has acquired in 4 different US states. Which US Airlines Might Merge Next? | TravelPulse SkyWest : Airlines Partners with Southwest Airlines' Destination 225 The rules here have not changed, but the enforcement will now result in a 30 day ban from APC for violations. We believe were getting closer to that point and could arrive there if reports about a MAX production cut materialize. As well, not put them in a position like this when a debacle happens with the aircraft type they are so heavily relying on. Alaska is still mending itself after the Virgin America merger. Explore Look, I am sure the executives in Dallas are seriously rethinking their one aircraft type strategy BECAUSE of the Max. It will take time for it to absorb Virgin's debt and combine operations. First of all, Alaska has a fairly extensive regional operation, with turboprop flights operated by its own regional subsidiary (Horizon Air) and regional jet flights that are contracted out. 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. So neither is a great fit beyond merely acquiring aircraft. A combined Frontier and Spirit would control over 8 percent of the market, and JetBlue and Spirit together would command more than 10 percent. Airline acquisition stories are always intriguing, like the perpetual rumor that Warren Buffett would buy Southwest (he does own about 10.2%.) Terms apply to the offers listed on this page. That mindset has just been proven false with Alaska Airline's acquisition of Virgin America. Worst U.S. airline is JetBlue, not Spirit or Frontier: WSJ ranking - CNBC Allegiant Air. For one, the market cap of JetBlue is nearly $5.4B (vs just $2.9B for Spirit). LOS ANGELES, CA - JUNE 12: Singer Jasmine V tries out the new JetBlue Mint luxury seating at the [+] JetBlue Mint Pop-Up Experience at The Grove on June 12, 2014 in Los Angeles, California. "[Southwest] wants to be prepared for opportunities in what has historically been an opportunity-rich industry," DeNardi wrote. the latest travel news, advice, updates, upcoming exclusive deals and more. Youre facing American, United, Delta and Southwest with such enormous fleets and market penetration, said Samuel Engel, a senior vice president and airline industry analyst at ICF, a consulting firm. Flying on Southwest has been awful. The company has a fix: Fewer - CNN JetBlue has guaranteed Spirit a reverse breakup fee if its deal is called off over antitrust concerns. 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. Will Southwest Really Merge With Alaska Or JetBlue? We may receive compensation when you click on links to those products. There are simply too many antitrust issues. 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). Edward joined the TPG team in June 2019 after seven years at FlightGlobal. At the start of 2019, Southwest expected deliveries of 44 737 MAX for a net increase of about 25 aircraft after planned retirements. Rumors are swirling that Southwest Airlines may solve its lingering Boeing 737 MAX problem by acquiring another airline. I simply cannot see it happening. U.S. Airline Mergers and Acquisitions | Airlines For America 4. WN has no interest in either one. Third, one thing the AirTran merger showed us was Southwests distaste for operating multiple fleet types. We have been contacted by major union legal teams regarding this issue. Is a Senior Aviation Business Reporter at The Points Guy. Will Southwest Really Merge With Alaska Or JetBlue? Southwest aircraft taxiing in Ft. Lauderdale, Florida. This is actually an interesting theory. Second, Alaska's route network is heavily concentrated in Seattle, where it caters to a lot of business travelers. Most international service gone? Now Sun Country that could be a very different story. 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. Please don't sabotage your own union's efforts on your behalf. But Southwest and Alaska or JetBlue? If Southwest buys JetBlue, it will also get its place in line for A321neo deliveries. However, there would be a number of issues bringing in JetBlue employees including union status, seniority and pay structure. The perfect @flysas name tag for #Longyearben! The AirTran merger brought a second type of plane -- the 717 -- into Southwest's fleet. Such an acquisition would: 1) Eliminate a significant and growing competitor (on ticket pricing) 2) Establish SWA in a large number of places theyve eventually wanted to be to the south (without having to create their own infrastructure, manning, etc) and 3) Solve the issue of lack of growth and diversify the fleet (i.e. Earlier in his career, he also reviewed mergers and acquisitions at the Justice Department. Why not buy Sun Country? Not that any merger would go fast enough to help WNs MAX problem. JetBlue was looking for a merger as well. This chart shows a view of problem reports submitted in the past 24 hours compared to the typical volume of reports by time of day. Most major airlines are in negotiations at this time, and many are contentious. Another Southwest Airlines Co. Merger Makes No Sense I just dont see an appetite for that. They sued for $74,999. 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. The company and powers that employs & also has a very tight/strict requirements guidelines with customer service. Certain hotels have resort fees. People talk about business models, aircraft type, etc most of that is irrelevant. alask Airlines has basically no debt paid off buying virgin thankfully before pandemic hit. But that number which was eye-popping when released may be conservative. Making the world smarter, happier, and richer. With a complementary narrowbody feet, Alaska Airlines and JetBlue are best positioned to absorb or be absorbed by Southwest. The credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. Merger Rumors in 2021: Lessons from US Airways and American Airlines Downdetector only reports an incident when the number of problem reports is significantly higher than the typical volume for that time of day. 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. Youd eventually bring the two together, but probably over 5 to 7 years it takes a while, but thats not a bad thing. Integrating airlines, including their computer systems and the seniority rankings of pilots and flight attendants, has never been easy and has led to widespread flight cancellations and long legal disputes. It would seem as if Southwest Airlines has a much stronger clientele base. A new merger scramble could challenge that cozy arrangement. "Acquiring JetBlue is such an opportunity.". While it has certain benefits in training and maintenance those factors would be an easy offset in allowing Southwest to add something like the A220 for long lean market pairs (I.e. The Company's most targeted sectors include airlines (75%) and aerospace (25%).. Join Mergr and gain access to Southwest . Southwest had a 7% share in Boston and a 3% share in New York, the latter before it announced plans to pull out of Newark. First Alaska has a long history as an independent and I have to think that over the years there have been other airlines that wanted to acquire them and got rejected. 18, 2017 in Los Angeles, California. With no end in sight to the grounding and other airlines like Delta (which has none) and United (which has a more agile fleet) stepping into fill the void, Southwest is losing market share. Southwest flight attendants ponder CEO Gary Kelly's next move after READ MORE: Report Suggests Frontier Airlines Is Going Public. The rival bids for Spirit from Frontier and JetBlue could create an airline that presents a more formidable challenge to American, Delta, Southwest and United. 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). They can more easily recruit pilots, who are in short supply. From a network perspective, though, Alaska doesnt make a ton of sense since Southwest is pretty well-established on the West Coast and probably does not have a lot of interest in operating Alaskas large EAS intra-Alaska routes. Gaining pricing power over Spirit helps SWA and increases profitability, growth, etc. Spotted four #polarbear outside of #longyearbyen -, One of the best crews I have ever had the pleasure, Next stop ARN! no merger has been botched quite like the AirTran one, giving away BOTH market share at ATL and 717 fleet to DL on a silver fleet. Its 17% share barely trails American, with 17.6%, and Delta, 17.4%. Southwest Airlines' Destination 225 Program ST. GEORGE, UTAH, March 17, 2022 - SkyWest Airlines, a wholly-owned subsidiary of SkyWest, Inc. (NASDAQ: SKYW), is pleased to announce a new partnership with Southwest Airlines as part of the carrier's Destination 225 Program. With Spirit being smaller (and among the most disliked airlines in America, BTW), I think its an easier sell. Regarding JetBlue, acquiring them would have significant value for sure, but would be much more challenging. The table is provided as a service rather than an authoritative source. 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. 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. The next couple of years will be interesting. A Southwest merger isn't in the cards, and ultra-budget airlines don't seem like a good match for JetBlue's cool image and state-of-the-art in-flight experience. 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. Also, with increasing competition for pilot hiring, bringing the pilots of Spirit over to SWA reduces the challenge of finding enough pilots over the next 6 or 7 years, at least. Unless you like paying more and getting less, asking for less competitive airlines is a bad idea. 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. Also, Southwest probably bit off more than they could chew when they acquired AirTran. And the Biden administration is uniquely focused on the impact of corporate deals on economic inequality by, for example, raising fares and suppressing wages. 2013 - Formed by merger of Aeroflot subsidiaries SAT Airlines and Vladivostok Air. And US Airways had much less in the way of contested hubs than an Alaska/Jet Blue hybrid would- they would literally have a bigger competitor in EVERY hub or focus city outside of Anchorage (lol). Photo: The Motley Fool. Southwest is great too its the greyhound in the sky no frills you pay for what you get-no expectation. Experiencing Planet Positive Travel At Wakaya, Fiji's Most Luxurious Private Island, The Greek Island Glow With Virgin Voyages, American Queen Voyages Spring Savings Event. Bidding War for Spirit Could Undercut Power of Four Big Airlines I am so excited tha, I greatly miss the @lufthansa #747-8 at @flylaxair. Though Virgin was a relatively small airline, Alaska probably won't be making any other acquisitions in the near future. Fourth, buying Alaska would also mean having to deal with the regional operation. The International Air Transport Association (IATA) said last November the airline industry will lose $157 billion in 2020 and 2021. The Motley Fool has no position in any of the stocks mentioned. Then Republic took over. Could ATA/Southwest Airlines Merger Work??? - FlyerTalk Forums Alaska is not a fan of Airbus with exception of A321. Still, it's hardly a match made in heaven. It charges extra for seat selection and carry-on baggage and packs seats close together. It is not always easy to predict the likely impact of any given deal, legal experts said. Raymond James analyst James Parker wrote in a research note to clients that Frontier could be acquired in a round of consolidation among low-cost carriers. Many people thought that the era of mergers and acquisitions ended when American Airlines joined forces with U.S. Airways. It would be an upgrade for Spirits current customers as well. Could Southwest Buy Alaska or Hawaiian Airlines Next? Travel Industry Coalition Urges Lifting of International Testing Requirement for Vaccinated Travelers. Could Southwest Buy JetBlue To Solve Growth Problem From 737 - Forbes List of airline mergers and acquisitions - Wikipedia This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This summer, flying Southwest Airlines has been a toxic mix of canceled flights, long delays and disgruntled pilots and flight attendants. United States, Apologizing to its passengers for its bad service, the . Siri hates me! Regulators are concerned about more than market share. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Southwest Airlines (LUV) Q1 2023 Earnings Call Transcript, Southwest Airlines (LUV) Q4 2022 Earnings Call Transcript, Why Southwest Airlines Stock Is Falling Today, Why Southwest Airlines Stock Fell in December, Why Southwest Airlines Is Losing Altitude Today, U.S. Money Supply Is Doing Something It Hasn't Done in 90 Years, and It May Signal a Big Move for Stocks, Why I Refuse to Chase the Maximum Social Security Benefit, Social Security Cuts May Be Coming. Annual Financial Results: U.S. Thoughts? In addition the airline industry is the most volatile hit hardest by where economy is standing, pandemics, war , not to mention if airline has huge debt from purchasing other airlines & inheriting their debt. Frontier flys many of the same routes and is the largest direct competitor in the very important DEN market. None of those MAX deliveries are flying, and the airline has scrambled to keep some aircraft slated for retirement around a bit longer. The last round of consolidation really was about balance sheets, he said. The idea that Southwest would merge with JetBlue or Alaska is fanciful at best and delusional at worst. Southwest paid $1.4 billion for AirTran. With Trump at the helm you never know of course but I dont think the regulators want to let the big 4 get any bigger by gobbling up one of the larger remaining independents. I see their planes landing after midnight regularly at BOS. But the deal would eliminate their competition on competitive routes, potentially hurting cost-conscious travelers. But even this schedule change was before Boeings latest disastrous 737 MAX announcement. ATA is in a horrible position. Were expecting M&A to occur. By numbers alone, JetBlues all-cash deal is superior, offering a roughly 40 percent premium to Frontiers original cash and share offer, based on share prices the day before JetBlue disclosed its bid. Adam Levine-Weinberg owns shares of Hawaiian Holdings, and The Boeing Company and is long January 2017 $17 calls on JetBlue Airways. If Southwest is sick of waiting for the 737 MAX to be declared safe to fly, why not just order some planes from Boeings competitor? CANADA (FR), Last updated: 4:30 PM ET, Wed April 6, 2016. Analysts speculated that JetBlue made its offer in part because it feared losing business to a combined Frontier-Spirit, which the airline cited as a potential risk to its competitiveness in its annual report. To be sure, the outlooks for the airlines this year remain horrible even as vaccines start to flow globally. United is going back to JFK [airport] after an absence of a few years and it [JetBlue] has a big presence there, long-time airline industry analyst Helane Becker of Cowen told Yahoo Finance Live. 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Join Mergr and gain access to Southwests M&A summary, the M&A summaries of companies just like it, as well as recent M&A activity in the airlines sector. Such a complicated industry. Also Indigo is privately held and therefore a merger could happen far more quickly. Update: This story has been updated to reflect Spirit and Frontier's announcement of a planned merger. But some analysts are not sure that airlines can easily reap the rewards of bigness through mergers. 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 colonial #architecture of #mumbai is stunning. (Photo by Michael Tullberg/Getty Images). So I dont get how Southwest is incompatible but Jet Blue is. Pretty sure he is on the record as saying it didnt work well. JetBlue similarly tries to keep costs low but tries to distinguish itself by offering more legroom and free wireless internet in flight. Of course, neither deal is a certainty, and in either combination, executives could struggle to mesh the businesses. 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. 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. By Acquiring AirTran, Will Southwest Continue to Spread the LUV? So now why Spirit? Southwest needs to diversify its fleet away from the 737," wrote Baker on Tuesday. Frontier, Spirit Airlines complete $6.6 billion merger to become fifth-largest U.S. airline. Alaska has a completely incompatible culture to include not hiring pilots if they use nicotine. The next largest carrier, American Airlines, had a 22% share. 2009 - Acquired AeroGal. Ask Doug Parker how much fun it was running a network with zero between Phoenix and Charlotte if you think hubs on coasts and zero between them work. Related:Southwest Airlines Bets on New York LaGuardia Following Newark Exit. Michael Goldstein is a journalist and playwright based in Los Angeles. It is common for some problems to be reported throughout the day. The current deals appear to be about quickly bulking up. Anyone can read what you share. The lounges are something NEITHER Jet Blue and Southwest do. Agree Mike except for the quickly part. 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. 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. Shares of the Big Four airlines are down on average 36% over the past year, according to Yahoo Finance Premium data. I still think that at the end of the day, either deal that could possibly be challenged would likely be approved, said Kerry Tan, an economics professor at Loyola University Maryland. It is reasonable that a beefier No. At nearly every level, the business models of JetBlue and Alaska are different than Southwests. Further, they should do this because despite when the MAX comes back, it will take years for the public to trust it again. BNA-SEA, PDX-MSY etc). Southwest has been in the news recently with canceled flights, technology issues, and today a Southwest passenger who couldn't keep their pants on and was arrested by the time they got to Phoenix. 5. 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. 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. A Southwest merger isn't in the cards, and ultra-budget airlines don't seem like a good match for JetBlue's cool image and state-of-the-art in-flight experience. Southwest is a discount airline serving the US market. Thats what stopped it 10 years ago, there unions there unions dragged there feet over it so both parties walked. There were significant differences in those areas in both cases. The four operate in a league of their own, especially at their hub airports in cities like Atlanta, Dallas, Houston and Newark, where they each control a large share of gates and flights. As long as the brains in the training center in Dallas dont try and re-invent the wheel, it would go not poorly. Herb is probably twitching in his grave even hearing someone mention it! Alaska is the exact opposite of Southwest. This adds a ton of complexity that Southwest's management is not accustomed to. 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). Especially to cure what really is a short term issue with the MAX. That would be a more reasonably sized candidate than AS or B6. Anything is possible in the airline industry. 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. Terms and Conditions Apply. A combined Southwest and JetBlue would have a solid 25% share of U.S. domestic traffic, based on DOT data for 2018. Southwest Airlines Newsroom Consumer advocates want the DOJ to move against JetBlue-Spirit merger - NPR In a recent update, he called JBLU a buy, claiming As Boeing's Stock Goes Down, JetBlue's Should Be Going Up. He put a target price on JBLU stock, currently around $19.15 a share, at $26. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. (Photo by FG/Bauer-Griffin/GC Images), conference at Southwest Airlines headquarters on April 17, 2018 in Dallas, Texas. This is a BETA experience. DeNardi, however, is not the first to pose such a question. 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. The Big Four in the airline industry long known as Delta (DAL), American Airlines (AAL), United Airlines (UAL) and Southwest Airlines (LUV) may look a little different at some point this year as executives pull the trigger on mergers to consolidate costs as the slog from the depths of the pandemic stretches on. 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. And the easiest way to grow at many airports is to buy another airline that has gates and takeoff and landing slots. Frontier-Spirit Merger to Create a U.S. Budget Airline Giant Apparently, many of Southwest's flight attendants think that the airline is now on the prowl for another merger partner. Mergers and Acquisitions Facts, rumors, and conjecture New Thread Subscribe Page 1 of 20 1 2 3 4 5 11 > All rights reserved. We should all know by now nothing is ever in inevitable. Southwest is probably also large enough to fit in this too-big-to-merge category. 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. Consolidation is slowing downMerger mania in the airline industry may not be over, but it is definitely slowing down. More likely is that WN goes out of the box and finds a way to lease previous gen 737s or hunt out a few that are on the market for sale to bridge the gap. Southwest will not be merging with Alaska Airlines There is really no real benefit for Southwest to do so.