Close Menu
    Facebook X (Twitter) Instagram
    Trending
    • Children’s animals in Tanzania: A video article from Tarangy, Nugurongoro, and Serinjiti
    • This professional traveler reveals how to tour the world without any remorse
    • Spring of 2025 external equipment and new books guide
    • The 18 best beaches in the world
    • River mares in Tanzania: Heavy weights in Africa
    • How to decide which one chooses
    • Tarangy National Park: The hidden jewel of Tanzania
    • 15 Something to do around Chautauqua Lake, New York – a short drive from Buffalo, Cleveland, or Pitsburgh
    Facebook X (Twitter) Instagram
    ZEMS BLOG
    • Home
    • Sports
    • Reel
    • Worklife
    • Travel
    • Future
    • Culture
    • Politics
    • Weather
    • Financial Market
    • Crypto
    ZEMS BLOG
    Home » Spirit and JetBlue face cloudy future after blocked merger: Travel Weekly
    Future

    Spirit and JetBlue face cloudy future after blocked merger: Travel Weekly

    ZEMS BLOGBy ZEMS BLOGJanuary 19, 2024No Comments3 Mins Read
    Facebook Twitter Pinterest LinkedIn Tumblr Email
    Share
    Facebook Twitter LinkedIn Pinterest Email

    A Jan. 16 federal court ruling blocking Spirit Airlines' merger with JetBlue could have dire consequences for Spirit and leave JetBlue with an uncertain future.

    Spirit has been unable to return to profitability post-pandemic and expects losses of more than $460 million for 2023.

    Spirit and JetBlue have the option to appeal the court's decision, which was issued by U.S. District Judge William Young. But unless the appeal is successful, Spirit will likely look for another buyer at a price well below the $3.8 billion JetBlue agreed to pay, analysts say.

    One potential buyer is Spirit's biggest low-cost carrier (ULCC) competitor, Frontier, which entered into a purchase agreement for Spirit in early 2022 before it was overtaken by JetBlue.

    “I think Frontier will still be interested at the right price,” said Brad Beckley, CEO of consulting firm Hospitalio.

    Size matters in the aviation industry, and the acquisition of Spirit will help Frontier right-size its capacity in the ULCC sector, Beckley said.

    However, Helen Becker, an investment analyst at Cowen, wrote that in 2022 Frontier intended to use its shares to pay for the acquisition. Since then, Frontier's stock prices have fallen by 60%.

    The most likely scenario is for Spirit to file for Chapter 11 bankruptcy, followed by liquidation, Baker said.

    “We realize this sounds alarming and harsh, but the reality is that we believe there are limited scenarios that enable Spirit to restructure,” she wrote, adding that Spirit has limited free cash flow.

    The main problem for Spirit is that there is too much capacity among domestic discount airlines, analysts say.

    Meanwhile, the ability of the giant airlines to separate themselves from larger airlines on the basis of cost has declined because labor scarcity has driven up wages, Beckley said.

    Analysts say the outlook for JetBlue, if Young remains in office, is better. Under the terms of their agreement, JetBlue will have to pay Spirit a $70 million separation fee if the merger fails. But a failed merger would also prevent JetBlue from taking on nearly $3.5 billion in debt.

    In the immediate aftermath of Young's decision, Spirit's stock fell more than 40%, but JetBlue's stock rose nearly 5%.

    “We believe the relief rally in JetBlue shares reflects the view that JetBlue is no longer on the hook for an expensive deal,” wrote Michael Linenberg, investment analyst at Deutsche Bank.

    Second setback for JetBlue

    However, a failure to acquire Spirit would be the second major shock for JetBlue since May, when a court ordered it to break up its alliance with American Airlines in the New York and Boston areas.

    Brett Snyder, an airline industry analyst who writes the Cranky Flier blog, wrote that JetBlue may now want to consider joining American in its appeal of that court decision. He said JetBlue should also focus on improving its lagging operating performance in the industry, focus more on Boston where it is the leading airline, and look for new opportunities in the United States when it acquires new planes.

    JetBlue, which will have a new CEO next month when Chairman Joanna Geraghty replaces outgoing CEO Robin Hayes, will have to develop a new strategy to avoid marginalization, Beckley said. The airline's product, which boasts the most economy legroom among major U.S. airlines, places it at the premium end of the leisure market. But with its smaller loyalty program and limited network size, JetBlue can't take the fare premiums of Delta, United and American.

    Beckley added that the real winners of Young's decision are the big three airlines, which will not have to face stiffer competition from the larger and stronger JetBlue, if Young's decision stands.

    Source link

    ZEMS BLOG
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Previous ArticleWinter weather events cost $754 annually in Texas, and Dallas leads the nation in hail damage
    Next Article Neil Mescal announces her first EP and releases a new single called “Killing Time”
    ZEMS BLOG
    • Website

    Related Posts

    Tim Berners-Lee makes predictions for the future

    March 12, 2024

    Response may bias understanding of future scenarios

    March 12, 2024

    Pioneering the future of defense technology through pioneering innovations

    March 12, 2024
    Leave A Reply Cancel Reply

    Children’s animals in Tanzania: A video article from Tarangy, Nugurongoro, and Serinjiti

    June 9, 2025

    This professional traveler reveals how to tour the world without any remorse

    May 30, 2025

    Spring of 2025 external equipment and new books guide

    May 29, 2025

    The 18 best beaches in the world

    May 28, 2025
    Recent Posts
    • Children’s animals in Tanzania: A video article from Tarangy, Nugurongoro, and Serinjiti
    • This professional traveler reveals how to tour the world without any remorse
    • Spring of 2025 external equipment and new books guide
    • The 18 best beaches in the world
    • River mares in Tanzania: Heavy weights in Africa
    About

    ZEMS BLOG in partnership with Holiday Omega keeps you informed. Bringing you the latest news from around the world with fresh perspectives and unique insights. Your daily source for news from around the world. All perspectives, all curated for a global audience.

    Facebook X (Twitter) Instagram YouTube Telegram
    • About Us
    • Contact Us
    • Privacy Policy
    • Disclaimer
    Subscribe For latest updates

    Type above and press Enter to search. Press Esc to cancel.