Enjoy Complimentary Marriott Bonvoy Gold Elite Status with your Card. The Chicago Business Journal is reporting that Southwest CEO Gary Kelly appears to be in the acquisition mode, and Hawaii may not be far from his thoughts and plans. However, 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. BNA-SEA, PDX-MSY etc). In addition, all airlines broke previous 52-week highs post merger something that would push JetBlue past its 2003 high of $30.00, or a 44% upside from yesterday's closing price if it followed . It makes more sense for Southwest to focus on organic growth rather than paying that much for an acquisition. At nearly every level, the business models of JetBlue and Alaska are different than Southwests. 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 International Air Transport Association (IATA) said last November the airline industry will lose $157 billion in 2020 and 2021. Much more palatable than buying Alaska, two completely different cultures. WN has no interest in either one. Southwest paid $1.4 billion for AirTran. But that number which was eye-popping when released may be conservative. Rumors on Delta Airline pilot forums that Delta will be securing approx 25 717's from another carrier. In February, Frontier Airlines and Spirit announced plans to merge, promising to create a national budget airline that would help keep fares low. If anything, United and JetBlue (with their massive Orlando expansions) would be a far better fit. 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. Southwest grew tremendously internationally after acquiring AirTran. 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. 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. They may have gained some additional routes and some young 737-700s. Will Southwest Really Merge With Alaska Or JetBlue? The credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. Look, I am sure the executives in Dallas are seriously rethinking their one aircraft type strategy BECAUSE of the Max. 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. Southwest was formed in 1967 and is based in Dallas, Texas. In Q2 WN had the highest net margin DESPITE the issues with the MAX. There are simply too many antitrust issues. We built Mergr to save people the arduous and time-consuming process of tracking when companies are bought, sold, and who currently owns them. At the start of 2019, Southwest expected deliveries of 44 737 MAX for a net increase of about 25 aircraft after planned retirements. 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. Does DeNardis analysis hold water? Hes previously published some provocative research, noting that the value of American Airlines loyalty program was worth more than the airline. Though Virgin was a relatively small airline, Alaska probably won't be making any other acquisitions in the near future. Its style and company profile do not present any viable merger candidates in the United States. 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. How about Spirit? When the dust settled on a big round of airline consolidation nearly a decade ago, four large companies came to dominate the industry. 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. Apparently, many of Southwest's flight attendants think that the airline is now on the prowl for another merger partner. 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. 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. 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. It will take time for it to absorb Virgin's debt and combine operations. Card Rating is based on the opinion of TPGs editors and is not influenced by the card issuer. Could ATA/Southwest Airlines Merger Work??? - FlyerTalk Forums Now a bit player like Sun Country could be a different deal. The colonial #architecture of #mumbai is stunning. 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. Alaska has a completely incompatible culture to include not hiring pilots if they use nicotine. (Photo by Michael Tullberg/Getty Images). Frontier could still raise its bid, or change its composition. Unfortunately, Airbus has a backlog of 3200 aircraft to deliver. Is The White Lotus breaking up with Four Seasons ahead of Season 3? Consumers could benefit from a better flying experience thanks to the perks that JetBlue offers. These 2 big airlines may shock everyone and merge in a bid to survive Melinda Gates: we are giving $250 million more to the COVID-19 relief effort, Olympics great Michael Phelps: the COVID-19 pandemic hasnt been all smiles for me, HP CEO: heres how our business is trending during the pandemic, Lululemon founder: retail will rally back after the pandemic, Walmart CEO: the lack of stimulus is taking its toll, Senator Ted Cruz: big tech is drunk on power. However, gaining the terminal at JFK (which would be an extremely valuable gateway to Europe) would be the boon. Such a complicated industry. Southwest is the #3 US airline by marketshare. Rumors that, if correct, could dramatically change the playing field in Hawaii travel. Southwest has few options (if any) and a merger with JetBlue or Alaska isnt a marriage that is practical or economical. With either Alaska or JetBlue (and especially JetBlue) they would be buying a ton of different airplanes. Whatever challenges the D.O.J. For such reasons, a deal is unlikely to happen. Third, one thing the AirTran merger showed us was Southwests distaste for operating multiple fleet types. He says that JetBlue has approximately 15 A321neo deliveries scheduled annually through 2022. 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. 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. 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. 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. We should all know by now nothing is ever in inevitable. By getting larger, any airline would be better able to spread out costs. Related:Southwests 737-700s Among Jets Sticking Around Longer Because of the MAX, "Southwest needs aircraft. They cant be too dumb at Love Field. Such is the modest proposal put forth by Stifel airline analyst Joe DeNardi. Keeping flight attendants and pilots on hand will be easy everybodys qualified. Now Sun Country that could be a very different story. 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. 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. Southwest has acquired 4 companies. 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. Remember why people fly WN. The Companys most targeted sectors include airlines (75%) and aerospace (25%). Most international service gone? 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. JetBlues routes are not necessarily complementary with Southwests, although an acquisition would give Southwest access to the London routes JetBlue promises to launch in 2021. You may opt-out by. Annual Financial Results: U.S. With Spirit being smaller (and among the most disliked airlines in America, BTW), I think its an easier sell. JetBlue executives said this week that they intended to continue the companys partnership with American in the Northeast. 2x points on all other eligible purchases. Frontier-Spirit Merger to Create a U.S. Budget Airline Giant Those three airlines have a 3% market share, maybe a little more now since they are so domestic. Unless in order to be called a red eye, you need to land later in the morning? The boards of both companies approved the deal over the weekend. 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. But one has to wonder if there are any logical merger targets left for JetBlue now that VA is off the market. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners. If Southwest bought JetBlue, it would not only remove the #6 US airline (JetBlue has 5.5% share ) from competition, Southwest would also become the largest US airline. Southwest has acquired in 4 different US states. 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. Previously, the IATA had forecast $100 billion in losses for the two-year period. This adds a ton of complexity that Southwest's management is not accustomed to. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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. Plus, earn an additional Free Night Award after you spend $60K in purchases on your Card in a calendar year. The rules here have not changed, but the enforcement will now result in a 30 day ban from APC for violations. I feel like Southwest does have red eyes flights. It would quickly give WN a dual fleet and a large presence in Central and South America, which they want. The next largest carrier, American Airlines, had a 22% share. But that does . It is common for some problems to be reported throughout the day. JetBlue had firm orders for 153 Airbus aircraft -- 70 A220-300s and 83 A321neos -- with delivery slots through 2026 at the end of September, its latest fleet plan shows. All contract under the jet labor. We may receive compensation when you click on links to those products. The perfect @flysas name tag for #Longyearben! The airline has removed the aircraft from schedules through Feb. 8, and continues awaiting clarity from U.S. authorities and Boeing on when the MAX will be re-certified. 717sgone. The real reason why Southwest CEO Gary Kelly is so eager to reach new labor contracts probably has. 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. 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. Matthew is an avid traveler who calls Los Angeles home. Also, Southwest probably bit off more than they could chew when they acquired AirTran. brilliant suggestion. Southwest is great too its the greyhound in the sky no frills you pay for what you get-no expectation. Airlines' recovery of . Alaska and JetBlue merger talk is completely out to lunch. A total of 2 acquisitions came from private equity firms.It has also divested 1 asset.. Southwest's largest acquisition to date was in 2010, when it acquired AirTran Airways for $1.4B. In an illustration of the industrys lopsided nature, Alaska Airlines, the fifth-largest carrier last year, controlled just 5 percent of the domestic air travel market, while United, the fourth biggest, had nearly 13 percent. So now why Spirit? 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. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. 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. Frontier and Spirit to merge, creating fifth-largest airline in U.S. in Frontier-Spirit merger would be main Southwest competitor at BWI, but 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright document.write(new Date().getFullYear()) Live and Let's Fly All Rights Reserved.Unauthorized use and/or duplication of this material without express and written permission from this sites author and/or owner is strictly prohibited. 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. 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. 2008 - Acquired Tampa Cargo. Anything is possible in the airline industry. 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. They also said that buying Spirit would allow JetBlue to compete more aggressively with the four big airlines. Not sure anyone would or should pay it. That mindset has just been proven false with Alaska Airline's acquisition of Virgin America. These are two completely different operators with completely different I.T. Crazy: American Airlines Passenger Kicked Off For Putting Bag In Wrong Overhead Bin? Will Southwest Really Merge With Alaska Or JetBlue? Gaining pricing power over Spirit helps SWA and increases profitability, growth, etc. Consumer advocates want the DOJ to move against JetBlue-Spirit merger - NPR the latest travel news, advice, updates, upcoming exclusive deals and more. If Southwest buys JetBlue, it will also get its place in line for A321neo deliveries. In terms of a spacious first class product, the @E, Nearly five years ago, I took a break from I, United Airlines' new Polaris seat is a huge improv. 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. Downdetector only reports an incident when the number of problem reports is significantly . The Company's most targeted sectors include airlines (75%) and aerospace (25%).. Join Mergr and gain access to Southwest . This summer, flying Southwest Airlines has been a toxic mix of canceled flights, long delays and disgruntled pilots and flight attendants. 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. The Motley Fool has no position in any of the stocks mentioned. JetBlue also has a mixed fleet, which consists of A320s and E190s. 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. Fourth, buying Alaska would also mean having to deal with the regional operation. - After two fatal crashes in five months, Boeing is trying hard -- very hard -- to present itself as unfazed by the crisis that surrounds the company. JetBlue was looking for a merger as well. 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). Spirit has about 140 planes (all AirBus) with 100 320 neo orders and 50 options through 2027 thats a lot of growth potential. List of airline mergers and acquisitions - Wikipedia

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