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. The Company's most targeted sectors include airlines (75%) and aerospace (25%).. Join Mergr and gain access to Southwest . 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. Would in all possibilities a merger between Southwest Airlines and American Trans Air be feasible. United Airlines Fires Six Senior Flight Attendants For Bullying Junior Flight Attendant. 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. Mr. Denis said regulators examining airline deals had historically focused on the impact of combining large, legacy airlines those in business for decades. If anything, United and JetBlue (with their massive Orlando expansions) would be a far better fit. 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. Beat Of Hawaii. Major unions have lost court cases and in one instance suffered severe financial damage in the process. None of those MAX deliveries are flying, and the airline has scrambled to keep some aircraft slated for retirement around a bit longer. 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). 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. Southwest CEO Gary Kelly, responding to Baker, said the MAX impact to that point was manageable and the airline continued to "execute" on its strategy. Herb is probably twitching in his grave even hearing someone mention it! However, there would be a number of issues bringing in JetBlue employees including union status, seniority and pay structure. Landing at the wrong airport would be terrible, and some people who have used Southwest Airlines know exactly how that feels. Does DeNardis analysis hold water? Hawaiian serves its namesake state from . Southwest needs to diversify its fleet away from the 737," wrote Baker on Tuesday. I just dont see an appetite for that. 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). (Photo by FG/Bauer-Griffin/GC Images), conference at Southwest Airlines headquarters on April 17, 2018 in Dallas, Texas. The rules here have not changed, but the enforcement will now result in a 30 day ban from APC for violations. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners. The boards of both companies approved the deal over the weekend. 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. The table is provided as a service rather than an authoritative source. Another Southwest Airlines Co. Merger Makes No Sense 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. See what a point or mile is worth with our appraisals of a loyalty programs currency, based on redemption values. 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. JetBlue already competes with the four large airlines in cities like New York and Boston and could challenge them further if it is able to acquire Spirits planes, airport gates and staff. Whatever challenges the D.O.J. Check here before booking an award fare. Which US Airlines Might Merge Next? | TravelPulse Moreover, most airlines lack the cash on the balance sheet to do a splashy deal. Smaller operator, all 737. 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 . The credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel. Shares of the Big Four airlines are down on average 36% over the past year, according to Yahoo Finance Premium data. Frontier could still raise its bid, or change its composition. You could see United Airlines buying JetBlue (JBLU). Neither the U.S. Department of Transportation nor A4A maintains official records of airline M&A activity. As such, we cannot verify the accuracy of each individual entry. Matthew is an avid traveler who calls Los Angeles home. When the FAA finally gives the A-OK , the theory goes, a flood of 737 MAX aircraft will make their way to the airlines, potentially adding excess capacity and driving fares down in the teeth of an oncoming recession. 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. A combined Frontier and Spirit would control over 8 percent of the market, and JetBlue and Spirit together would command more than 10 percent. Second I tend to doubt that an Alaska or JetBlue acquisition would be allowed by the DOT. Do you see any possibility of merger between Southwest and Alaska or JetBlue? But to Beckers point, some airline executives with the better balance sheets and stomachs of steel may be the reason they have no choice but to strike now on a target. https://www.forbes.com/advisor/author/brandon-bycer/, https://www.forbes.com/advisor/author/hjohnson/. Thats because larger airlines have advantages. The buzz followed a report by Stifel analyst Joseph DeNardi diving into the feasibility of a Southwest-JetBlue tie-up. Recently Acquired United States Companies, M&A research that takes seconds (not all afternoon), Better understand your customers and prospects. 5 will make for a stronger competitor.. The airline was the largest U.S. operator of the type with 34 aircraft when it was grounded in March and has not taken delivery of a single new aircraft since then. And the Biden administration is uniquely focused on the impact of corporate deals on economic inequality by, for example, raising fares and suppressing wages. We'll run a soft credit check to find special offers, but it wont affect your credit score. Sure it could. 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. Such is the modest proposal put forth by Stifel airline analyst Joe DeNardi. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Alaskas fleet has a lot more in common with Southwest (mostly 737) than Jet Blue (all-Airbus). Could ATA/Southwest Airlines Merger Work??? - FlyerTalk Forums J.P. Morgan analyst Jamie Baker asked in July whether Southwest was considering "non-organic" growth -- in other words, buying another airline -- due to the rising impact of the Boeing 737 MAX grounding. Explore Southwest has few options (if any) and a merger with JetBlue or Alaska isnt a marriage that is practical or economical. 5. The Southwest Changes and Cancellations Hub is where you will find answers and information on refunds, overbooking, and flight credits. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, and reddit. 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. As for the financial impact, as Southwest CEO Gary Kelly put it when reporting net income of $659 million in October 2019, "Our third quarter 2019 record financial performance was notable considering an estimated$210 millionreduction in operating income due to the continued grounding of the Boeing 737 MAX 8 aircraft., DALLAS, TX - APRIL 17: CEO and Chairman for Southwest Airlines Gary Kelly speaks during a press [+] conference at Southwest Airlines headquarters on April 17, 2018 in Dallas, Texas. And while Spirit and JetBlue have some overlap, for example in similar fleets of planes, they operate differently. 20 Glaring Problems With Southwest Airlines - TheTravel (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP/Getty Images). 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). Problematically for Southwest, the eventual re-certification of the 737 MAX may not re-balance the current trajectory. Could Southwest Buy Alaska or Hawaiian Airlines Next? Southwest Airlines outages reported in the last 24 hours. There were significant differences in those areas in both cases. A Southwest-JetBlue tie up is unlikely in the short term. Senator Elizabeth Warren, the Massachusetts Democrat, is another skeptic. Acquiring JetBlue makes sense in terms of acquiring a foothold back in New York, but they operate an all Embraer/Airbus fleet, which clashes with their current model. Anything is possible in the airline industry. Southwest has acquired 4 companies. 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. brilliant suggestion. Southwest has acquired in 4 different US states. 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. Today, DeNardi writes,Currently, Southwest's business model is entirely dependent upon the [737]MAX returning and Boeing resuming/ramping production. Southwest is arguably the US airline most affected by the continuing Boeing 737 MAX disaster. It is common for some problems to be reported throughout the day. 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. Rumors that, if correct, could dramatically change the playing field in Hawaii travel. 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).. It is against the APC Forum Rules to advocate any labor action which is not authorized by the RLA/NMB. He said Alaska Airlines, AirTran,. What happens when you acquire another airline is, for quite a while (4 or 5 years more if you want to slow roll it), both airlines operate under their separate brands. For one, the market cap of JetBlue is nearly $5.4B (vs just $2.9B for Spirit). Those three airlines have a 3% market share, maybe a little more now since they are so domestic. Fourth, buying Alaska would also mean having to deal with the regional operation. We believe were getting closer to that point and could arrive there if reports about a MAX production cut materialize. It would quickly give WN a dual fleet and a large presence in Central and South America, which they want. But that does . 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. If anyone on our team wouldnt recommend it to a friend or a family member, we wouldnt recommend it on The Points Guy either. reduce the dependence on Boeing). As a subscriber, you have 10 gift articles to give each month. The table below is an unofficial compilation of completed (not merely proposed) mergers and acquisitions since the inception of the U.S. airline industry. Not setting foot on one for a few years until I am certain it is safe. It has emerged that the airline, which is now the sixth largest in the United States, was trying to acquire Virgin America. 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. 2008 - Acquired Tampa Cargo. U.S. All Rights Reserved. When Alaska Airlines bought the much smaller Virgin America in 2016, it took three years just to repaint all the planes. Watch Yahoo Finances live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. alask Airlines has basically no debt paid off buying virgin thankfully before pandemic hit. The next couple of years will be interesting. U.S. Airline Mergers and Acquisitions | Airlines For America At the start of 2019, Southwest expected deliveries of 44 737 MAX for a net increase of about 25 aircraft after planned retirements. 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. 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. 2013 - Formed by merger of Aeroflot subsidiaries SAT Airlines and Vladivostok Air. They also said that buying Spirit would allow JetBlue to compete more aggressively with the four big airlines. Now a bit player like Sun Country could be a different deal. Keeping flight attendants and pilots on hand will be easy everybodys qualified. Sell side analysts and their version of click bait. Much more palatable than buying Alaska, two completely different cultures. None of these companies would be a very suitable merger partner, and attempting to merge would create a huge distraction just as Southwest is starting to ramp up its organic growth again. It operated 194 A320 family jets and 60 Embraer 190s at the time. Earlier in his career, he also reviewed mergers and acquisitions at the Justice Department. These 2 big airlines may shock everyone and merge in a bid to survive Annual Financial Results: U.S. Yes, a small amount of planes, but all 737 NG planes and they wouldnt need a ton of reconfiguration. And, it would also put itself in a position to be a market share consolidator in the post-pandemic recovery. Receive 1 Free Night Award every year after your Card renewal month. I simply cannot see it happening. The current deals appear to be about quickly bulking up. Will miss the @united #globalfirstlounge at #ord. JetBlue operates two models of aircraft already. So let's check in on Southwest Hawaii flights from the airline with "heart, hospitality and spirit" as reflected in their logo and mission. Some critics of corporate consolidation disagree and say that airline mergers could be bad for consumers and workers. Some in the industry have expected a merger between Frontier and Spirit, two of the most successful ultra-budget airlines in the country. 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. Southwest flight attendants ponder CEO Gary Kelly's next move after BNA-SEA, PDX-MSY etc). And while an acquisition of JetBlue may not be the answer, DeNardi is right that airlines like Southwest will need to think out of the box to grow, even as the 737 MAX mess continues to fester. With Spirit being smaller (and among the most disliked airlines in America, BTW), I think its an easier sell. JetBlue was looking for a merger as well. A combined Southwest and JetBlue would have a solid 25% share of U.S. domestic traffic, based on DOT data for 2018. Not too many people would miss Sun Country and its planes fit. This is not the first time JetBlue has tried to grow by acquiring another airline. Of course, neither deal is a certainty, and in either combination, executives could struggle to mesh the businesses. The aircraft are different, of course, which would require training and logistical upgrades. 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. JetBlue and Spirit Airlines announced Thursday they have reached an agreement on a merger that would create the fifth largest airline in the U.S. I think Southwest and AirTran had a much closer business model than Alaska or JetBlue, but AirTran quickly became Southwest. Southwest's corporate headquarters in Dallas, Texas. 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. First classgone. 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. As the 737 MAX problems continue and Southwest is forced to cancel an increasing number of flights (as more deliveries are deferred), the financial implications grow. There might also be some push-back from federal regulators. Look, I am sure the executives in Dallas are seriously rethinking their one aircraft type strategy BECAUSE of the Max. Concerns over new strains of the coronavirus have amplified the concerns on travel demand. It will never happen. Invest better with The Motley Fool. JetBlue also has a mixed fleet, which consists of A320s and E190s. But that number which was eye-popping when released may be conservative. This heat map shows where user-submitted problem reports are concentrated over the past 24 hours. Second, Alaska's route network is heavily concentrated in Seattle, where it caters to a lot of business travelers. Agree. 75235 We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Could JetBlue be an answer to Southwests problems? The rules here have not changed, but the enforcement will now result in a 30 day ban from APC for violations. So neither is a great fit beyond merely acquiring aircraft. American Airlines. Agree Mike except for the quickly part. 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. Southwest paid $1.4 billion for AirTran. Southwest grew tremendously internationally after acquiring AirTran. Regarding JetBlue, acquiring them would have significant value for sure, but would be much more challenging. SkyWest : Airlines Partners with Southwest Airlines' Destination 225 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. The two companies coming together figuring out the logistics could monopolize domestic flying in the United States. Except for one thing: AirTran's not completely folded in yet. 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. Still, it's hardly a match made in heaven. All told I suspect Alaska or Jet Blue would ask for a good premium on their value. Siri hates me! Not sure anyone would or should pay it. If Boeing announces further MAX return-of-service delays and/or a 737 MAX rate cut, that would increase risk to Southwest of a multi-year constraint on its capacity. 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). Airline industry has a lot to ponder with what they just went through/pandemic. With its recent Virgin America purchase, Alaska Airlines is now the fifth largest carrier in the country. (Photo by FG/Bauer-Griffin/GC Images). Its style and company profile do not present any viable merger candidates in the United States. However, in the fourth quarter Spirit posted revenues 1.8 percent higher than in 2019 at $988 million; Frontier revenues were down 7 percent year-over-two-years to $609 million. 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). I feel like Southwest does have red eyes flights. This summer, flying Southwest Airlines has been a toxic mix of canceled flights, long delays and disgruntled pilots and flight attendants. Southwest has acquired 4 companies. So I dont get how Southwest is incompatible but Jet Blue is. The MAX saga has introduced a new risk for Southwestthat of operating a single fleet type where your ability to fly the aircraft is determined by other airlines, other airlines' pilots, and Boeing, writes DeNardi. Not that any merger would go fast enough to help WNs MAX problem. However, gaining the terminal at JFK (which would be an extremely valuable gateway to Europe) would be the boon. Highest passenger count of an airline in the USA. The Justice Department is seeking to nullify an alliance between JetBlue and American in the Northeast. Not a chance in heck. 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. The largest A320NEO order in the world under parent company Indigo Partners. The last round of consolidation really was about balance sheets, he said. The three remaining legacy carriers are too big to merge with each other. Southwest Airlines current status | Downdetector The theory goes something like this. A new merger scramble could challenge that cozy arrangement. 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. 18, 2017 in Los Angeles, California. The Southwest Airlines mess and rumors of a vaccine walkout 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. Merger rumors? - FlyerTalk Forums That leaves airlines that are further down the size rankings. Card Rating is based on the opinion of TPGs editors and is not influenced by the card issuer. 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. Merger Rumors in 2021: Lessons from US Airways and American Airlines Further, they should do this because despite when the MAX comes back, it will take years for the public to trust it again. It is irrelevant whether the union itself has anything to do with the action. 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. 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. WASHINGTON, February 2, 2022 Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, led a coalition of travel-industry groups urging 2023 Airlines for America (A4A). United Airlines. JetBlue's merger with Spirit will knock out one of America's largest Downdetector only reports an incident when the number of problem reports is significantly . In the meantime, the 737 MAX continues to drag on Southwest. 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. Southwest Airlines outage and reported problems map 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. 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. 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.
