JetBlue and Spirit Call Off Their Merger

JetBlue Airways and Spirit Airlines announced on Monday that they would walk away from their planned $3.8 billion merger after federal antitrust regulators successfully challenged the deal in court. JetBlue said it would pay Spirit $69 million to exit the deal. From a report: A federal judge in Boston blocked the proposed merger on Jan. 16, siding with the Justice Department in determining that the merger would reduce competition in the industry and give airlines more leeway to raise ticket prices. The judge, William G. Young of the U.S. District Court for the District of Massachusetts, noted that Spirit played a vital role in the market as a low-cost carrier and that travelers would have fewer options if JetBlue absorbed it.

"We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines' interests are better served by moving forward independently," JetBlue's chief executive, Joanna Geraghty, said in a statement on Monday. "We wish the very best going forward to the entire Spirit team." JetBlue and Spirit appealed Judge Young's decision. JetBlue filed an appellate brief last week arguing that the deal should be allowed to go through. But in a regulatory filing on Jan. 26, JetBlue said it might terminate the deal. Spirit said in its own filing the same day that it believed "there is no basis for terminating" the agreement.

How is this news for nerds?

[Virtucon]

Slow news day?

Nerds depend on airplane trips

[Latent Heat]

to see Mom and Dad once a year and to attend Cousin Fran's wedding this summer in Phoenix when it is 108 deg-F outside.

Nerds rely on low airline ticket prices.

Blocking this merger insures that travel on the carriers offering the most misery at least stays cheap.

Re:

[Virtucon]

You forget Spirit

Re:

[wyHunter]

It is miserable - but if you compare inflation adjusted ticket prices to those in (say) 1975, 4 hours of hell is worth saving a boatload of money. Of course, I'd rather drive than fly any day.

Re:

[LazarusQLong]

you forget, many nerds seem to live in Mom and Dad's basement.

News that matters

[rsilvergun]

inflation is insane and there's multiple studies showing it's corporate price gouging. This is the 1st major merger to get shut down in probably a decade. It's huge news. Maybe that grocery store merger can be stopped too.

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[ac22]

US inflation is currently at 3.1%. That's not "insane". It would have taken you 30 seconds to check your facts before posting.

https://ycharts.com/indicators... [ycharts.com]

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[wyHunter]

50% over the FED targeted rate is high. And real inflation is even higher.

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[HBI]

Today's inflation article...grim reading [wsj.com]

But yeah, inflation is only 3.1% and we should all be happy. The problem is that the current inflation rate, lowballed as it is to reduce COLA costs on fixed income pensions, doesn't take into account the hangover of three years of radical (by the standards of the last 40 years) inflation. Few of us remember the early 1980s.

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[LazarusQLong]

... or the early 70's. Those days even the 'middle class' was having to tighten their belts between the various oil embargoes, inflation, wage stagnation... it was a rough time to be a tax payer.

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[wyHunter]

Um, I know a lot of middle class people now are having to tighten their belts, and that's been true since 1Q2021.

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[LazarusQLong]

hell, I had a buddy in 1989 who had a 12% mortgage and he felt lucky to have gotten it! he could have been turned down for it, and he had pretty good credit, at least as I recall from back then when he was sharing with me over a pint one night before going home.

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[wyHunter]

I remember being so happy, mid 1980s, getting my first car loan and having it "only" be 11% because I was in a good credit union. Other loans were at 14%.

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[ac22]

Since the FED set its 2% target in 2012, there have been 6 years where inflation was above 2% and 6 years where it was below. It even hit -0.1 in 2015. The 2% target is arbitrary at best.

https://time.com/6548908/infla... [time.com]

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[wyHunter]

So what? It still means that the rate is too high.

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[ac22]

Looking more closely, as of last week, the inflation figure that the Fed use for their target fell to 2.4%:

US inflation eased to 2.4 per cent in the year to January, according to the metric that the Federal Reserve uses for its inflation target, supporting expectations of rate cuts later this year.

The headline PCE figure, the metric for the Fed’s 2 per cent target, was the lowest for almost three years.

https://archive.is/pBTFE [archive.is]

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[wyHunter]

That is better news. Shadow stats does some interesting stuff, and I find for 'pain at the till' it's far more accurate: https://www.shadowstats.com/al... [shadowstats.com]

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[wed128]

Even if inflation has slowed down to reasonable levels from the crazy levels from the last couple of years, it'll still be a long while until salaries catch up to the resultant higher prices caused by that massive bump. It's important to remember that 3.1% is a measure of the rate of change, and that as inflation slows, many many people are struggling to buy groceries much more then they were just a few years ago. It's not as if prices ever go down.

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[wed128]

Thank you for that chart that shows average salary spiked when white collar workers worked from home and blue collar workers were laid off in 2020. Real revelation there. My grocery bill is insane, but that chart has ensured me that we're in good hands and the economy isn't shit. Thank you.

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[wed128]

One more data point https://data.bls.gov/cgi-bin/c... [bls.gov] My income hasn't increased by 20 percent since 2020, has yours?

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[ac22]

This is the 1st major merger to get shut down in probably a decade

Again, even a tiny amount of research would have shown you that this was wrong:

https://www.nytimes.com/2022/1... [nytimes.com]
https://www.nytimes.com/2021/0... [nytimes.com]

Please stop posting things that are factually incorrect because you are too lazy to do a quick Google.

Good

[HBI]

I mean Spirit is probably going out of business as a result of this, but M&A activity should be discouraged at every juncture.

“Liquidity is always king, and we have enhanced our levels to give us the necessary flexibility to successfully close with JetBlue or to pursue our stand-alone plans,” Christie said. “Above all else, margin repair is the key and we have been making network adjustments and cost decisions to recover our margin production.”
Spirit's buzzword affected CEO [skift.com]

Re: Good

[TuballoyThunder]

I think JetBlue is in a precarious position. They need the Spirit slots at LAX to make more money on the east coast to LAX routes (a major revenue source for airlines). Without that revenue, it will be more difficult to have the cash flow needed to compete with larger carriers. Jet Blue is in the too expensive to be a LCC and not big enough to effectively compete with the legacy carriers. Customer satisfaction does not translate to favorable lease terms or corporate financing (loans or bonds)--cash flow is king.

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[jacks smirking reven]

That could be true but then what is the "true free market" way to deal with that?

On the one hand if Jetblue's business is in trouble due to structural factors it has found itself in today should the optimal response be to just buy/merge another company to get itself out of trouble or should their potentially bad business decision mean they have to figure it out or go under (where their carcass is devoured by the other larger animals)?

An alternative would be that if Spirit does in fact go under then their ga

Re:

[radarskiy]

"They need the Spirit slots at LAX"

LAX is not slot limited.

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[Valgrus Thunderaxe]

Ryan Air claims prior art.

Re:

[test321]

You haven't heard all of it, even. Here RyanAir boss now talking about removing the SEATS (he calls that a Standing Cabin). https://www.ladbible.com/news/... [ladbible.com]

Just for the record, here is some coverage of RyanAir saying it's pushing to Boeing to re-certify their planes with 6 additional seats by removing 2 toilet booths https://www.independent.co.uk/... [independent.co.uk] and their plan to have the sole remaining booth paid https://www.thesun.co.uk/trave... [thesun.co.uk]

Re:

[jacks smirking reven]

Someone says Solyndra, that means it's time for the reminder that although it was a high profile failure even with that factored in the government program it was a part of turned a profit:

After Solyndra Loss, U.S. Energy Loan Program Turning A Profit

Overall, the agency has loaned $34.2 billion to a variety of businesses, under a program designed to speed up development of clean-energy technology. Companies have defaulted on $780 million of that — a loss rate of 2.28 percent. The agency also has collec

Foreshadowing: Alaska and Hawaiian?

[kid_wonder]

Can't believe I'm on /. commenting on airline mergers

"JetBlue said it would pay Spirit $69 million"

[AnonCowardSince1997]

Nice. All for a No Job.

Shitty and Shittier

[registrations_suck]

Shitty and Shitter go their own ways.

Oh well.