Justice Department’s Spirit Suit Leaves Some Feeling Blue
The Justice Department formally filed suit to block JetBlue’s potential takeover of Spirit. The merger was announced last July after dodging several hurdles when Spirit was left with no choice but to accept JetBlue’s $3.8 billion offer.
In its filing, the federal government claims the deal would harm consumers by eliminating “about half of all ultra-low-cost airline seats in the industry.” The Department of Justice contends the tie-up would dampen competition and that “on dozens of routes serving tens of millions of passengers each year, JetBlue and Spirit are two of the most significant rivals today, and they have such large combined market shares that the transaction is presumptively illegal.”
The government was joined by New York, Massachusetts, and Washington, D.C. in the suit while JetBlue and Spirit joined forces with four pre-law students at Villanova headed to Punta Cana who came very highly recommended from Spirit.
JetBlue CEO Robin Hayes said his airline was disappointed but not surprised by the lawsuit, sticking to his talking points that combining with Spirit is the only way JetBlue – or anyone else – could take a fair shot at the top four U.S. airlines. The federal government has a history standing in the way of major airline mergers, requiring Alaska to reduce its codeshare AAgreement with American to allow its purchase Virgin America to go through, and settling with US Airways after it sold slots at Washington/National to complete its purchase of AA.
The suit stands in contrast from the fact the merger is expected to do nothing but create more options for consumers, add jobs to the economy, and offer unicorns and rainbows to all passengers. It’s true, just ask JetBlue.
For more on the DOJ lawsuit, please visit Tuesday and Thursday posts at crankyflier.com.
American PrepAAred to Match Delta Offer, Pilots Unimpressed
American Airlines CEO Robert Isom said his carrier is prepared to match both the pay scale and profit-sharing offered to Delta pilots in order to preserve labor peace at the airline, but the pilots’ union is unimpressed by the offer.
AA’s proposal would give itss pilots a contract worth in excess of $7 billion and it would include other incentives including a disco ball in the pilot break room at DFW and a snow cone machine in both Miami and Los Angeles.
By year four of the contract, narrowbody captains could see annual salaries as high as $475,000 with widebody captains maxing out at $590,000. AA pilots rejected a tentative offer from AA last November that offered a raise of 19% over the next two years, because they want to give a larger number back to the airline during the next downturn.
The Allied Pilots Association, which represents American’s pilots saw its executive board vote unanimously on Wednesday to authorize a strike vote to the entire membership. If the vote happens, it’s expected to take nearly two months, and not wrap up until April 30. On the bright side for American, its flight attendants are very happy with their contract situation and aren’t expected to create any ripples during the pilot negotiations. (Spoiler: Nope, not true)
American Flight Attendants Push for Raise
As AA battles its pilots over pay and other contract terms, the airline is gearing up to fight a second front at the same time — as its flight attendants also look for better working conditions and pay.
The Association of Professional Flight Attendants (AFPA) is seeking a 35% bump to the hourly rate offered its 23,000 members at American along with boarding pay and other carrots in exchange for the stick of signing a new contract.
If AA AAccepts the offer, senior FAs would earn nearly $100 per hour while new hires would start at $41 per hour, up from the current $30.35. The increased pay would not come with the disco ball the pilots asked for in Dallas/Fort Worth, but would come with the snow cone machines in Miami and Los Angeles.
The union’s proposal includes 6% increases each year, meaning the most senior members could earn about $110 by the third year of the contract. It also asks for half-pay during boarding — similar to a deal Delta’s FA’s got last year — plus a bonus for each bag they put in the overheads that was packed by someone who knew good and well they couldn’t put it in the bin themselves.
Avelo Adds Five
Avelo Airlines is blowing into five new cities, with six new routes coming to its map this summer, expanding its presence up and down the east coast.
The new destinations for the carrier are Memphis, Manchester (NH), Rochester, Greenville (SC), and Mobile (AL).
Greenville/Spartanburg is the only one of the new destinations to receive service to two cities, as Avelo will offer flights from GSP to both its existing base in New Haven and to Orlando. GSP to Orlando will operate 2x weekly beginning June 7, while GSP to New Haven will begin June 22, also 2x weekly.
Rochester, Memphis, and Manchester will all see service exclusively to Raleigh/Durham at the start, while Mobile sees flights from Orlando.
Mobile to Orlando will begin May 31 and operate 2x weekly. The flight will represent the first commercial service from BFM since Frontier no longer claimed it as a frontier in 2020.
JetBlue Breaks Ground at JFK
JetBlue’s $4.2 billion Terminal 6 project at New York/JFK is underway and is expected to be completed by 2028 or whenever it gets around to it.
The construction will take place in two phases and will connect with JetBlue’s current home in T5 behind security. The first phase is planned to be completed by 2026 when the terminal will open for business and some gates will be ready, with the entire project — and all 10 gates — not being done for two more years.
The new terminal will have touchless technology from arrival to boarding, giving passengers less opportunities to interact with the rats who moved over from LGA since its recent glam up.
JetBlue received a green-light to begin this project in 2021, long before Spirit was a bright yellow twinkle in its eye. The Port Authority is generously committing $130 million for the project, a drop in the bucket compared to its $4.2 billion budget — a figure expected to swell with cost overruns — while also providing one BOGO bus pass valid for one-way travel to any destination from the Port Authority bus terminal to all JetBlue executives.
- Air France will receive three additional A350-900 aircraft on lease from Air Lease Corporation next spring.
- airBaltic is wet-leasing four A320s from Avion Express to keep its capacity up for the summer season.
- American made the rash decision to bar Indian citizen Arya Vohra from flying on the carrier in the future. Just goes to show how much times have changed…you get sloppy drunk on one flight and urinate on one passenger and all of a sudden the airline bans you without even hearing your side of the story.
- ANA is acquiring Nippon Cargo Airlines.
- Azul is feeling far less blue after successfully renegotiating terms on more than 90% of its aircraft lease agreements.
- Cathay Pacific posted its first profit since the pandemic.
- CityJet saw its merger with Air Nostrum approved, something everyone at the latter carrier knew was going to happen before anyone else did.
- Conviasa is answering the prayers of tens of people across the world as it finally connects Caracas and Damascus. It hasn’t announced a start date, route frequency, or any sort of schedule, but it’s absolutely, definitely, 100% certain it’s going to operate the route,
- Emirates signed an interline agreement with Philippine Airlines.
- Ethiopian will begin flying to Karachi with 4x weekly flights on May 1.
- Eurowings kept some passengers onboard a plane that diverted to Fort Lauderdale for so long some of the passengers called 911.
- Flair is beginning service to Phoenix on October 30 with 4x weekly flights to Calgary to compliment its heavy presence down the road in Tucson. It’s also adding Calgary and Ottawa to Las Vegas and Waterloo (YKF) and Toronto to Puerto Vallarta.
- GlobalX earned $97.1 million last year. To solve for X, divide both sides by Global, so X=97.1 million/global.
- Gol reached its target objective closing a round of $1.4 billion financing.
- JetBleu announced its new service from New York/JFK to Paris will operate daily beginning June 29.
- JSX reportedly debuted its Starlink internet onboard for industry bloggers and media. This has not been confirmed.
- LATAM finished the year with $2.3 billion in liquidity. It doesn’t want you to worry about anything else on its earnings report but that.
- Myanmar Airways International signed an LOI to begin service on the historically underserved route between Yangon and Moscow/DME.
- Northern Pacific filed its first flight and just as we all expected, it’s once-weekly service between Ontario and Las Vegas, flying eastbound on Friday and back to ONT on Sunday.
- Qatar will begin operating the B737-8 MAX on its short-haul network.
- Ryanair flew two passengers to the wrong country because the passengers opted out of the carrier’s destination confirmation fee.
- Scoot will retire all its A320ceo aircraft by the end of 2025.
- TAP is bracing for potential legal action as former CEO Christine Ourmières-Widener is unhappy with the circumstance resulting from her being tapped out of the chief executive role.
- SAS completed a sale and leaseback deal for 10 A320-200neos to be delivered through early next year.
- Southwest is experimenting with a bunch stuff that’s supposed to make boarding more efficient, but there’s only so much you can do for people who forget all societal norms when boarding an airplane.
- WestJet‘s takeover of Sunwing is expected to be approved by the Canadian government.
What’s green, fuzzy, and will kill you if it falls out of a tree and lands on you?
A pool table.
The more I fly southwest these days. the more I get frustrated with the boarding process. The other day I had B20 and was in the very last row of the plane.
Southwest used to be great when they were the only airline that didn’t have change fees. Now they’re pretty much the same as everyone else (minus the drink coupons, which are still amazing).
I think that Northern Pacific announcement just might be the least impressive new route announcement in this century. Woo.
And the T6 project sounds wildly expensive for just 10 gates, but interesting that 9 of the 10 are widebody-capable. Room for a partner with widebodies, or could we see JetBlue buy A330s or A350s?
CraigTPA – It’s not just for JetBlue. Lufthansa will be moving in there as well.
That’s interesting. Do you know why? JetBlue doesn’t really have any connections to LH. Just a straight tenant relatinship to help fund the new terminal?
CraigTPA – I have no idea how that all came together, but I assume it had something to do with the redevelopment of T1 as well since that’s where Lufthansa is today. Either way, all the LH Group carriers will be in T6.
If DOJ is against airlines in different market segments merging, and successfully blocks this one, do we see airlines pivot to mergers of similar status, especially those like B6 that compete in the same market segment as the big legacies?
Any way you look at it, this is probably the last merger attempt for a while, probably at least until a change in administration. From a “we’ll lose a ULCC” perspective, Spirit/Frontier would be just as bad as Spirit/JetBlue.
You could see something involving Sun Country, Avelo, or Breeze, but if B6/NK fails the only possibility I see is Alaska merging with AA or B6. AA/AS could possibly pass muster in that AA is weak on the West Coast. AS/B6 would pretty much create a “Big 5” situation, and from a route combination perspective combines two airlines strong on one coast and very weak on the other.
But I don’t see AS being interested in merging with anyone.
So Kansas City can build an entirely new 30-40 gate airport, terminal and concourses, for $1.5 billion but a 10 gate terminal at JFK is $4.2 billion?
Even factoring the various mafia, graft and corruption taxes that seems absurd. 10 gates? $4.2 billion? At the end of the day, passengers pay for that via pax fees, fees charged to the airline passed along to passengers via higher fares, etc. But I bet there will be one helluva Lufthansa senator’s club that very few of the people paying for this terminal will ever see.
KC airport build also included new parking garages and roadway improvements in addition to terminal, concourses, etc.
As a NY state resident I can’t help but feel that something is ridiculously wrong with how our state spends on capital projects.
It just seems very incongruous and wasteful. Nobody in government cares because it all ends up being paid by John and Jane Q. Public anyway. Shameful!
Regarding AA pilot negotiations, what would incentivize crankyflier.com to seek Allied Pilots Association comment on the matter? In the interest of fairness and impartiality it’s worth mentioning that AA pilots are asking for pay raises sans contract language concession (like Delta). You make no comment on whether AA is seeking scope concessions in exchange for a 40% pay raise, which would queue Space Jet and E2 orders.
Let us contrast conflicting opinions in AA pilot negotiations to include the opinions of ten and a half thousand AA pilots.
Bick – This is a weekly news roundup. Nobody is seeking comment from anyone on it. It’s all just a look at what’s in the news.