southwest airlines merger rumors southwest airlines merger rumors
Making the world smarter, happier, and richer. Except for one thing: AirTran's not completely folded in yet. Recently Acquired United States Companies, M&A research that takes seconds (not all afternoon), Better understand your customers and prospects. Southwest is great too its the greyhound in the sky no frills you pay for what you get-no expectation. It would let Sun Country go away gracefully although it really doesnt deserve such a decent demise. 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. People talk about business models, aircraft type, etc most of that is irrelevant. Save my name, email, and website in this browser for the next time I comment. Not setting foot on one for a few years until I am certain it is safe. 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. It tried to buy Virgin America, but lost that deal to Alaska Airlines. 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. Photo: The Motley Fool. Doubters see Southwests 737 MAX problem as a short-term issue. Spirit has about 140 planes (all AirBus) with 100 320 neo orders and 50 options through 2027 thats a lot of growth potential. Not that any merger would go fast enough to help WNs MAX problem. 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). 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 AirTran merger brought a second type of plane -- the 717 -- into Southwest's fleet. Second, Alaska's route network is heavily concentrated in Seattle, where it caters to a lot of business travelers. Also Indigo is privately held and therefore a merger could happen far more quickly. 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. Frontier flys many of the same routes and is the largest direct competitor in the very important DEN market. Finally, the free night award certificate with a redemption level of 35,000 points or less can get you hundreds of dollars in potential value each year. However, it is highly unlikely that Southwest Airlines is thinking about any merger. Were expecting M&A to occur. The International Air Transport Association (IATA) said last November the airline industry will lose $157 billion in 2020 and 2021. A combined Southwest and JetBlue would have a solid 25% share of U.S. domestic traffic, based on DOT data for 2018. 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. Could JetBlue be an answer to Southwests problems? 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. Southwest serves Mexico, Hawaii and Central America now, just like Alaska. But even this schedule change was before Boeings latest disastrous 737 MAX announcement. Every day, new opportunities emerge around M&A and we help professionals of all types comb through transactions, investors, and corporate acquirers via an easy-to-use web database that is accessible to anyone. The lounges are something NEITHER Jet Blue and Southwest do. Herb is probably twitching in his grave even hearing someone mention it! Annual Financial Results: U.S. 2003 - Acquired OceanAir and VIP Ecuador. 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. Shares of the Big Four airlines are down on average 36% over the past year, according to Yahoo Finance Premium data. Highest passenger count of an airline in the USA. 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). As well, not put them in a position like this when a debacle happens with the aircraft type they are so heavily relying on. Anything is possible in the airline industry. For example, last summer Southwest dropped service to Newark (EWR) and 9 million New Jersey residents, citing the continued grounding of the MAX. I am so excited tha, I greatly miss the @lufthansa #747-8 at @flylaxair. 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. 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping. 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. Regulators would probably never approve a merger between, say, United and Delta. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, and reddit. Though it might make more sense for it to merge with a legacy carrier (and become its low-cost wing) than for two legacies to merge with each other, approval for a Southwest merger would be very difficult, if not impossible, because of the low-cost carrier's size. It would seem as if Southwest Airlines has a much stronger clientele base. 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. The table below is an unofficial compilation of completed (not merely proposed) mergers and acquisitions since the inception of the U.S. airline industry. 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. This is not the first time JetBlue has tried to grow by acquiring another airline. WN is interested in larger airplanes now, so the A220 isnt a priority where the 320/321 would rank high. (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP/Getty Images). 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. Second I tend to doubt that an Alaska or JetBlue acquisition would be allowed by the DOT. www.southwest.com. A solid 89% of the flight attendants participated in the ratification vote, and 87% of them voted against the tentative agreement. 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. Southwest has acquired 4 companies. The company and powers that employs & also has a very tight/strict requirements guidelines with customer service. Debts are creeping up on American Airlines and other airline companies. Frontier could still raise its bid, or change its composition. Youd eventually bring the two together, but probably over 5 to 7 years it takes a while, but thats not a bad thing. But some analysts are not sure that airlines can easily reap the rewards of bigness through mergers. Those three airlines have a 3% market share, maybe a little more now since they are so domestic. 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. From an operational perspective, it seems that Alaska would make more sense since they have a lot more Boeing aircraft. For such reasons, a deal is unlikely to happen. Airports, Western Air Express / Transcontinental Air Transport, Delta Air Lines / Chicago and Southern (C&S) Air Lines, Western Airlines / Pacific Northern Airlines, Allegheny Airlines / Lake Central Airlines, Allegheny Airlines (later renamed US Airways), Alaska Airlines / Alaska Coastal Airlines, Pacific Airlines / Bonanza Airlines / West Coast Airlines, American Airlines / Trans Caribbean Airways, North Central Airlines / Southern Airways / Hughes Airwest, Continental Airlines / Texas Air Corporation, Continental Airlines / People Express / New York Air / Frontier Airlines, American Airlines / Eastern Air Lines: Latin Routes, Delta Air Lines / Pan Am Airlines (Shuttle and Atlantic Routes), United Airlines / Pan Am: Latin & Caribbean Routes, Delta Air Lines / Atlantic Southeast Airlines, SkyWest / Atlantic Southeast Airlines / ExpressJet Airlines, United Airlines (via ManaAir) / ExpressJet Airlines, Southern Airways / Air Choice One (Multi-Aero). He says that JetBlue has approximately 15. 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. The colonial #architecture of #mumbai is stunning. Rumors on Delta Airline pilot forums that Delta will be securing approx 25 717's from another carrier. By logging into your account, you agree to our. 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. It has emerged that the airline, which is now the sixth largest in the United States, was trying to acquire Virgin America. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. But its instructive to note that what was originally considered tragic but short term problem for Boeingthe initial crash of a Lion Air Boeing 737 MAX on October 29, 2018has morphed into a massive issue that has consumed the company, its now-fired CEO, its reputation and stock price. There have been predictions of widespread airline consolidation since the onset of the Covid-19 pandemic, but don't expect 2021 to be the year that happens. You could potentially convert some of those to XLR orders giving you the range to go to Europe or deep into South America. Of course, neither deal is a certainty, and in either combination, executives could struggle to mesh the businesses. 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. Mr. Denis said regulators examining airline deals had historically focused on the impact of combining large, legacy airlines those in business for decades. Southwest has performed multiple mergers in the past, most recently with AirTran, whose service model wasnt that much different from Alaskas- regional carrier having to be an LCC because Delta was a big force in one of their markets, competitive with Southwest elsewhere, had a first class cabin. 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. 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. Matthew is an avid traveler who calls Los Angeles home. I am one example of many I am sure. It will take time for it to absorb Virgin's debt and combine operations. American Airlines. Cost basis and return based on previous market day close. Southwest paid $1.4 billion for AirTran. 4. 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. (Photo by FG/Bauer-Griffin/GC Images). Then Republic took over. Would be great for Alaska to acquire Alaska being in the game East Coast/S America & conversion rate bus pilots ready to go! It is common for some problems to be reported throughout the day. I could see WN and Spirit before anything else. Certain hotels have resort fees. Such a complicated industry. 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. 6x Marriott Bonvoy Points on each dollar of eligible purchases at hotels participating in the Marriott Bonvoy program. Smaller operator, all 737. Airline acquisition stories are always intriguing, like the perpetual rumor that Warren Buffett would buy Southwest (he does own about 10.2%.) 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. Yes, a small amount of planes, but all 737 NG planes and they wouldnt need a ton of reconfiguration. 717sgone. The next largest carrier, American Airlines, had a 22% share. It is not always easy to predict the likely impact of any given deal, legal experts said. A combined Southwest and JetBlue would have a solid 25% share of U.S. domestic traffic, based on DOT data for 2018. I simply cannot see it happening. JetBlue was looking for a merger as well. So neither is a great fit beyond merely acquiring aircraft. Alaska is still mending itself after the Virgin America merger. Awards can be used for one night (redemption level at or under 35,000 Marriott Bonvoy points) at hotels participating in Marriott Bonvoy. These are two completely different operators with completely different I.T. With Spirit being smaller (and among the most disliked airlines in America, BTW), I think its an easier sell. But Southwest and Alaska or JetBlue? 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. "Acquiring JetBlue is such an opportunity.". You could see United Airlines buying JetBlue (JBLU). When the dust settled on a big round of airline consolidation nearly a decade ago, four large companies came to dominate the industry. 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).. 2x points on all other eligible purchases. Southwest serves more then 100 destinations in 40+ states, the District of Columbia, the Puerto Rico, and five near-international countries via wholly owned subsidiary, AirTran Airways. They sued for $74,999. How about Spirit? 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. It is reasonable that a beefier No. 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. The rules here have not changed, but the enforcement will now result in a 30 day ban from APC for violations. Now Sun Country that could be a very different story. I recently spent a weekend at the @ventanabigsur. 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. We built Mergr to save people the arduous and time-consuming process of tracking when companies are bought, sold, and who currently owns them. Anyone can read what you share. Will Southwest Really Merge With Alaska Or JetBlue? In February, Frontier Airlines and Spirit announced plans to merge, promising to create a national budget airline that would help keep fares low. It is against the APC Forum Rules to advocate any labor action which is not authorized by the RLA/NMB. Review: Lufthansa Business Lounge Athens (ATH), U.S. Tightens The Screws On Cuban Tourism, Southwest Airlines Technology Trouble Re-Emerges, Guessing JetBlues Next European Destination, Irrefutable Proof The JetBlue-Spirit Merger Hurts Consumers, Hyatt Acquisition of Mr. And Mrs. Smith Platform Aligns Well, Huge Frequent Flyer Programs Struggle At Freddie Awards, American Airlines First Class Passenger Dragged Off Plane After Demanding Pre-Departure Beverage. He added that the possibility of non-organic growth was larger than the MAX and a "huge, strategic question.". He says that JetBlue has approximately 15 A321neo deliveries scheduled annually through 2022. '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. READ MORE: Report Suggests Frontier Airlines Is Going Public. 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. This Southwest Airlines merger talk simply seems to be a case of the rumor mill run amok. Not too many people would miss Sun Country and its planes fit. Best card for premium perks while traveling, Capital One Venture X Rewards Credit Card, The Business Platinum Card from American Express, Marriott Bonvoy Business American Express Card, Southwest unveils stunning new Hawaii-themed aircraft, How to redeem Chase Ultimate Rewards points for maximum value, IHG Rewards Premier Business card review: The annual fee is justified. Seems like an awfully expensive way to solve what their management should hope is a shorter-term issue. BNA-SEA, PDX-MSY etc). All contract under the jet labor. Moreover, most airlines lack the cash on the balance sheet to do a splashy deal. Terms and Conditions Apply. This applies to ANY wildcat actions, including slowdown, work-to-rules, withdrawal of enthusiasm (WOE), sickouts, etc. Spirit has not committed to either deal. I see their planes landing after midnight regularly at BOS. The aircraft are different, of course, which would require training and logistical upgrades. Watch Yahoo Finances live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Thus, Southwest will merge or acquire another carrier in order to stem the flow to its competition. 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. 2009 - Merged with TACA Airlines. "seniority_list" merger integration software, Do Not Sell or Share My Personal Information. 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. Frontier Airlines has single cabins. 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. I just dont see an appetite for that. It would be an upgrade for Spirits current customers as well. It has also divested 1 asset. CANADA (FR), Last updated: 4:30 PM ET, Wed April 6, 2016. 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. 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. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. As such, we cannot verify the accuracy of each individual entry. DeNardi, however, is not the first to pose such a question. For the airlines that want it done right then RIGHT now is the time to work out brain damage of airlines coming together! Ms. Moss and others published a study in 2013 that concluded that airlines dont deliver on the benefits they claim their mergers will provide. Invest better with The Motley Fool. Check here before booking an award fare. Hawaiian serves its namesake state from . We believe were getting closer to that point and could arrive there if reports about a MAX production cut materialize. It will never happen. 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. (Photo by Stewart F. House/Getty Images), Southern California Logistics Airport in Victorville, California on March 28, 2019. 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. Both these airlines have a similar business model and similar services, so they would be able to meld their operations quite easily. JetBlue operates two models of aircraft already. First classgone. Southwest has over 100 737 MAX on order, with growth plans built around that aircraft. Limited Time Offer: Earn 125,000 Bonus Marriott Bonvoy Points after you use your new Card to make $5,000 in purchases within the first 3 months of Card Membership. Report Suggests Frontier Airlines Is Going Public, Selling Groups, family and Adventure Travel. Consolidation is slowing downMerger mania in the airline industry may not be over, but it is definitely slowing down. Acquire them simply for the turn key second fleet type and to do away with a competitor. Update: This story has been updated to reflect Spirit and Frontier's announcement of a planned merger. 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. Find the right card for you. They may have gained some additional routes and some young 737-700s. Southwest has been consistently profitable and has a strong balance sheet, which could help finance an acquisition. Frontier could also offer to pay any costs associated with the risk that regulators would challenge the merger in court. The theory goes something like this. Neither the U.S. Department of Transportation nor A4A maintains official records of airline M&A activity. 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. 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. 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. The perfect @flysas name tag for #Longyearben! (Photo by Stewart F. House/Getty Images), Southwest just pushed back its potential return to service date of the 737 MAX again, to June 6, 2020, stating The revision will proactively remove roughly 330 weekday flights from our schedule out of our total peak-day schedule of more than 4,000 daily flights.. Sell side analysts and their version of click bait. To make the world smarter, happier, and richer. 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. Major unions have lost court cases and in one instance suffered severe financial damage in the process. The Southwest Changes and Cancellations Hub is where you will find answers and information on refunds, overbooking, and flight credits. All Rights Reserved. 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. PO Box 36611, Airlines' recovery of . Potentially even doing the unthinkable: Adding Airbus to the fleet. Added Becker, You can see Allegiant, Frontier and Spirit merge. Southwest needs to diversify its fleet away from the 737," wrote Baker on Tuesday. If You Do This, You Won't Have to Worry About Them, 1 Trillion-Dollar Growth Stock Down 28% You'll Regret Not Buying on the Dip, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. Some in the industry have expected a merger between Frontier and Spirit, two of the most successful ultra-budget airlines in the country.
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