If we do see more deals ahead, they probably will come primarily from smaller carriers bulking up. We built Mergr to save people the arduous and time-consuming process of tracking when companies are bought, sold, and who currently owns them. 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). The buzz followed a report by Stifel analyst Joseph DeNardi diving into the feasibility of a Southwest-JetBlue tie-up. With Trump at the helm you never know of course but I dont think the regulators want to let the big 4 get any bigger by gobbling up one of the larger remaining independents. This Southwest Airlines merger talk simply seems to be a case of the rumor mill run amok. Mergers and Acquisitions Facts, rumors, and conjecture New Thread Subscribe Page 1 of 20 1 2 3 4 5 11 > 6x Marriott Bonvoy Points on each dollar of eligible purchases at hotels participating in the Marriott Bonvoy program. However, the flight attendants clearly weren't impressed. 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). 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. It is irrelevant whether the union itself has anything to do with the action. As a best-case scenario, airlines this year are facing a low-demand first half followed by a potentially swift recovery at least of leisure business in the second half, dependent on an effective vaccine rollout. Becker said, however, that depressed stock prices make doing a big airline deal now problematic. "[Southwest] wants to be prepared for opportunities in what has historically been an opportunity-rich industry," DeNardi wrote. Rumors of a Frontier-Spirit marriage have gained new energy now that a former Spirit exec is at the head of Frontier and Spirit's new CEO was running AirTran when it merged with Southwest in 2010. 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. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. The MAX saga has introduced a new risk for Southwestthat of operating a single fleet type where your ability to fly the aircraft is determined by other airlines, other airlines' pilots, and Boeing, writes DeNardi. Not sure anyone would or should pay it. However, it is highly unlikely that Southwest Airlines is thinking about any merger. (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.. If Southwest buys JetBlue, it will also get its place in line for A321neo deliveries. Alaska Air (ALK 1.14%), Hawaiian Airlines (HA 6.25%), and JetBlue (JBLU 2.73%) top the list of speculation (via Chicago Business Journal). 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. many are wondering which airlines will be the next to consolidate. Southwest is great too its the greyhound in the sky no frills you pay for what you get-no expectation. 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. Most major airlines are in negotiations at this time, and many are contentious. 2003 - Acquired OceanAir and VIP Ecuador. Does DeNardis analysis hold water? United Airlines. AirTran flew off into the sunset last December. LOS ANGELES, CA - JUNE 12: Singer Jasmine V tries out the new JetBlue Mint luxury seating at the [+] JetBlue Mint Pop-Up Experience at The Grove on June 12, 2014 in Los Angeles, California. 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. Agree. JetBlue similarly tries to keep costs low but tries to distinguish itself by offering more legroom and free wireless internet in flight. Source: Southwest Image Library. Regulators are concerned about more than market share. Southwest is the #3 US airline by marketshare. Flight attendants are suspiciousA few months ago, Southwest Airlines reached a tentative agreement with the Transport Workers Union on a new flight attendant contract. 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. But some analysts are not sure that airlines can easily reap the rewards of bigness through mergers. 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. But Southwest and Alaska or JetBlue? We'll run a soft credit check to find special offers, but it wont affect your credit score. The Southwest Changes and Cancellations Hub is where you will find answers and information on refunds, overbooking, and flight credits. Of course, neither deal is a certainty, and in either combination, executives could struggle to mesh the businesses. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Airline merger rumors buzzing in 2021 With business airline travel down 85 percent in 2020, airlines across the board. 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. 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. Though Virgin was a relatively small airline, Alaska probably won't be making any other acquisitions in the near future. (Photo by FG/Bauer-Griffin/GC Images), conference at Southwest Airlines headquarters on April 17, 2018 in Dallas, Texas. Look, I am sure the executives in Dallas are seriously rethinking their one aircraft type strategy BECAUSE of the Max. Great if Alaska purchased Jet blue w/bonus of gaining more routes East Coast. If Southwest is sick of waiting for the 737 MAX to be declared safe to fly, why not just order some planes from Boeings competitor? For example, last summer Southwest dropped service to Newark (EWR) and 9 million New Jersey residents, citing the continued grounding of the MAX. This summer, flying Southwest Airlines has been a toxic mix of canceled flights, long delays and disgruntled pilots and flight attendants. Refund policy Change or cancel your flight Flight credits Overbooking Procedures Transferable Flight Credit Same-day change and Same-day standby. In Q2 WN had the highest net margin DESPITE the issues with the MAX. All Rights Reserved. A combined Frontier and Spirit would control over 8 percent of the market, and JetBlue and Spirit together would command more than 10 percent. https://www.forbes.com/advisor/author/brandon-bycer/, https://www.forbes.com/advisor/author/hjohnson/. Watch Yahoo Finances live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Smaller operator, all 737. 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. All rights reserved. reduce the dependence on Boeing). As long as the brains in the training center in Dallas dont try and re-invent the wheel, it would go not poorly. It has emerged that the airline, which is now the sixth largest in the United States, was trying to acquire Virgin America. Under either deal, the new larger airline would have more market power in certain cities, particularly in Florida, a popular destination where all three airlines compete. By getting larger, any airline would be better able to spread out costs. 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. Southwest grew tremendously internationally after acquiring AirTran. Smaller airlines could be the next to merge. Would in all possibilities a merger between Southwest Airlines and American Trans Air be feasible. With Spirit being smaller (and among the most disliked airlines in America, BTW), I think its an easier sell. A solid 89% of the flight attendants participated in the ratification vote, and 87% of them voted against the tentative agreement. Of course, management at SWA would eventually want things to change, but theyd move toward the SWA way of doing things at their own pace. And US Airways had much less in the way of contested hubs than an Alaska/Jet Blue hybrid would- they would literally have a bigger competitor in EVERY hub or focus city outside of Anchorage (lol). We have been contacted by major union legal teams regarding this issue. Online posts, including anonymous posts and posts made here on APC, have been used in lawsuits against unions. "Acquiring JetBlue is such an opportunity.". At nearly every level, the business models of JetBlue and Alaska are different than Southwests. Southwest is probably also large enough to fit in this too-big-to-merge category. First classgone. With a complimentary route map and compatible fleet, and regardless of AS' financial status, it all seems to click. A Southwest merger isn't in the cards, and ultra-budget airlines don't seem like a good match for JetBlue's cool image and state-of-the-art in-flight experience. JetBlue also has a mixed fleet, which consists of A320s and E190s. A Southwest merger isn't in the cards, and ultra-budget airlines don't seem like a good match for JetBlue's cool image and state-of-the-art in-flight experience. Becker has Market perform ratings on both United and JetBlue. They sued for $74,999. Airline Mergers and Acquisitions Jan 17, 2023 The table below is an unofficial compilation of completed (not merely proposed) mergers and acquisitions since the inception of the U.S. airline industry. Also, Southwest probably bit off more than they could chew when they acquired AirTran. 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. 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. Please don't sabotage your own union's efforts on your behalf. Card Rating is based on the opinion of TPGs editors and is not influenced by the card issuer. Southwest Airlines Bets on New York LaGuardia Following Newark Exit, Southwests 737-700s Among Jets Sticking Around Longer Because of the MAX, Do Not Sell or Share My Personal Information. The table is provided as a service rather than an authoritative source. structures, with completely different company cultures, said Robert Mann, an industry analyst and consultant. Opinions expressed by Forbes Contributors are their own. This is a BETA experience. 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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Southwest CEO Gary Kelly, responding to Baker, said the MAX impact to that point was manageable and the airline continued to "execute" on its strategy. Those three airlines have a 3% market share, maybe a little more now since they are so domestic. The Justice Department is seeking to nullify an alliance between JetBlue and American in the Northeast. Anything is possible in the airline industry. 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. Explore I simply cannot see it happening. (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP/Getty Images). Credit ranges are a variation of FICO Score 8, one of many types of credit scores lenders may use when considering your credit card application. Its 17% share barely trails American, with 17.6%, and Delta, 17.4%. There might also be some push-back from federal regulators. This is not the first time JetBlue has tried to grow by acquiring another airline. Thus, Southwest will merge or acquire another carrier in order to stem the flow to its competition. They may have gained some additional routes and some young 737-700s. Unless you like paying more and getting less, asking for less competitive airlines is a bad idea. Also Indigo is privately held and therefore a merger could happen far more quickly. Travel Industry Coalition Urges Lifting of International Testing Requirement for Vaccinated Travelers. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear).