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Judge blocks JetBlue from acquiring Spirit Airlines

nytimes.com

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Re: Judge blocks JetBlue from acquiring Spirit Airlines

#111

Post by paul7986 »

haliskerbas wrote: post #79
dtnewman wrote: post #46

I am personally happy with this decision. I don’t love flying spirit but I respect them, ever since hearing their former CEO speak on a Planet Money podcast. He said straight up that Spirit Airlines is aiming to be the Dollar General of the skies. If you want something luxurious, go elsewhere. But he called out the other airlines who pretend like they are the Nordstrom of the skies, but don’t actually live up to that…

Spirit also doesn’t live up to that in my experience. Their cost structure nickel and dimes the consumer so much that by the time you get to the destination you may have paid more for a much less comfortable trip. At least in my anecdotal experience.

If you are a lite traveler .. fly with clothes in book bag then Spirit is the way to go and it's cheap. If you expect same experience you get from the others ..free checked luggage, refund or credit if you missed your flight, free peanuts and a soda, quick user interface / experience to book a flight, customer service rep to talk with and possibly free wifi you shouldn't bother with Spirit (spend more money for those things).

As a lite traveler Spirit fits my needs and I have more money in my pocket for my trip(s). As well I'm off the plane with my book bag and out of the airport quickly! I always get an aisle seat up front.

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#112

Post by volkl48 »

adabyron wrote: post #65
dtnewman wrote: post #46

I am personally happy with this decision. I don’t love flying spirit but I respect them, ever since hearing their former CEO speak on a Planet Money podcast. He said straight up that Spirit Airlines is aiming to be the Dollar General of the skies. If you want something luxurious, go elsewhere. But he called out the other airlines who pretend like they are the Nordstrom of the skies, but don’t actually live up to that…

It should be noted that these were 2 small airlines trying to merge together with very little overlap & a willingness to divest more if the Government would work with them. The government refused to talk divestures & it seemed just wanted to block this deal to set a precedence. I do not think they care about Spirit's future or competition here. Another important item from the trial - only 1/3 of Spirit customers pay…

They are the 6th and 7th largest airlines in the country. They are small only relative to the 4 largest.

The best argument I see for allowing the merger is that Spirit has been consistently losing money since the pandemic and may no longer have a viable business model. If they're destined for shutting down in the long run anyway, then you may as well let them attempt to merge, that'll probably lead to less of their market share winding up with the 4 biggest than them simply closing up shop will.

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#113

Post by daynthelife »

haliskerbas wrote: post #79
dtnewman wrote: post #46

I am personally happy with this decision. I don’t love flying spirit but I respect them, ever since hearing their former CEO speak on a Planet Money podcast. He said straight up that Spirit Airlines is aiming to be the Dollar General of the skies. If you want something luxurious, go elsewhere. But he called out the other airlines who pretend like they are the Nordstrom of the skies, but don’t actually live up to that…

Spirit also doesn’t live up to that in my experience. Their cost structure nickel and dimes the consumer so much that by the time you get to the destination you may have paid more for a much less comfortable trip. At least in my anecdotal experience.

Just to add some data points, I’ve flown spirit many times (at least 20), have never paid any more than the base cost, and have never had any issues. Maybe it’s just that I go in with the expectation that I’ll receive no special service, but my overall experience has been fine.

Of course, I wouldn’t fly spirit if I had a complex flight itinerary or needed to be 100% sure I would arrive when expected. Then again, I’ve had more issues with other airlines (looking at you Alaska) as well, so go figure.

All that being said, the invisible variable most of us miss is plane maintenance. I don’t know what spirit’s record is in particular on this axis, but some airlines really skimp on maintenance costs, sometimes leading to entirely preventable disasters ([0] to name one of many)

[0] https://en.wikipedia.org/wiki/Alaska_Airlines_Flight_261

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#114

Post by rising-sky »

adabyron wrote: post #85
rising-sky wrote: post #78

Earlier quoted context omitted.

> Rivals on average cut prices 7% to 11% when Spirit enters a market[1][2]. The same cannot be said for JetBlue > “If JetBlue were permitted to gobble up Spirit — at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,” Young wrote. “… Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a m…

On the first 2 arguments - Spirit was able to be successful for a few years. That's no longer the case. They're not profitable. I believe this was stated by multiple airline CEO's publicly. > That's a bit hyperbolic. If it does crush anti-competitive / anti-trust mergers, that's a win in any capitalist's book The judge literally ruled here that a very small market (1/3 of customers on a small airline) would be harmed…

If the argument is 1/3 vs 2/3, seems pretty clear where the ruling would fall if those are the two options.

> ...the government refused because they didn't care about competition or working with JetBlue.

I take it this is your opinion based on your perception?

However from the U.S.News link I posted above

"The judge, who had questioned whether further asset divestitures could make the deal work, said, "The courthouse doors remain open, should the defendant airlines decide to try again."

You can also read the actual ruling [1] which states:

> _"Throughout June 2022, JetBlue made a series of revised offers to acquire Spirit, with increases in per-share price, increases in the reverse termination fee, and commitments to divestitures. Spirit continued to resist, citing continued concerns about the anticompetitive nature of such an acquisition. On June 6, 2022, Mr. Christie received an email from Mr. Hayes with an attached new, revised offer for Spirit Airlines. On June 27, 2022, JetBlue made a further amended offer to purchase Spirit; the Spirit Board did not view this amended offer as better and did not accept it. Instead, Spirit issued another press release on June 28, 2022, reaffirming its commitment to the transaction with Frontier and noting that the “[l]atest offer from JetBlue does nothing to address our Board’s serious concerns that a combination with [JetBlue] would not receive regulatory approval.”_

So even the Spirit board did not prefer this acquisition, even with the divestitures, but acquiesced to expected shareholder concerns on value maximization

[1]https://s3.documentcloud.org/documents/24362262/jetblue.pdf

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#115

Post by delfinom »

haliskerbas wrote: post #79
dtnewman wrote: post #46

I am personally happy with this decision. I don’t love flying spirit but I respect them, ever since hearing their former CEO speak on a Planet Money podcast. He said straight up that Spirit Airlines is aiming to be the Dollar General of the skies. If you want something luxurious, go elsewhere. But he called out the other airlines who pretend like they are the Nordstrom of the skies, but don’t actually live up to that…

Spirit also doesn’t live up to that in my experience. Their cost structure nickel and dimes the consumer so much that by the time you get to the destination you may have paid more for a much less comfortable trip. At least in my anecdotal experience.

Sounds exactly like a Dollar General or any "dollar store"

https://thehustle.co/the-economics-of-dollar-stores/

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#116

Post by anon373839 »

deadbabe wrote: post #30
paul7986 wrote: post #25

Bummer to read spirit might go under .. as a lite traveler ..stuff my clothes/belongings in a book bag ..spirit is very inexpensive and after ten or more good/fine flights in 2023 their my go to airline. None of my flights with them were any different than paying more to fly with the other more expensive airlines. My worst was a delta flight as they didn't clean the bathroom and it stink up the mid section of the pla…

Ironically I think Spirit’s big front seats are the best value in the sky in terms of price and comfort, and they’re usually available if you book early enough.

Yep, I have fiddled with my origin/destination cities just so I could take a Spirit flight with a Big Front Seat. The perks of a real domestic first class are nice, but the main thing you’re paying for is space to yourself. On Spirit, that space just costs a lot less.

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#117

Post by ohashi »

oceanplexian wrote: post #81
ohashi wrote: post #49

Earlier quoted context omitted.

So it's a bad ruling because previous administrations didn't try to enforce anti monopoly laws? Why not view it as, this is a good start and hoping it continues to prevent even more consolidation and monopoly in airlines and other industries? The notion that there has to be more consolidation to compete is only good for the companies monopolizing - not the consumer. Why should we be helping them make more profit by a…

It’s bad because the government is artificially manipulating market forces and prevents price discovery. Imagine you’re thinking of starting a small airline, like a Jetblue or Spirit, but investors know that if the business ever plans to exit through an acquisition, the government will intervene. Well, as an investor I’d be a lot less likely to invest. As a result, you stifle the free market and prevent the emergence…

Yet you completely ignore the non competition in monopolistic markets? Markets aren't pure and price discovery is stifled in a lot of ways. Arguing consolidation will help make a fairer market is ignorant if not disingenuous.

Won't someone think of the poor investors? Again, that's not who public policy should serve.

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#118

Post by adabyron »

rising-sky wrote: post #114
adabyron wrote: post #85

Earlier quoted context omitted.

On the first 2 arguments - Spirit was able to be successful for a few years. That's no longer the case. They're not profitable. I believe this was stated by multiple airline CEO's publicly. > That's a bit hyperbolic. If it does crush anti-competitive / anti-trust mergers, that's a win in any capitalist's book The judge literally ruled here that a very small market (1/3 of customers on a small airline) would be harmed…

If the argument is 1/3 vs 2/3, seems pretty clear where the ruling would fall if those are the two options. > ...the government refused because they didn't care about competition or working with JetBlue. I take it this is your opinion based on your perception? However from the U.S.News link I posted above "The judge, who had questioned whether further asset divestitures could make the deal work, said, "The courthouse…

The judge asked the DOJ if there were any divestures that could be made that would make them think this deal should go through. They said no. I believe this was in the closing statements. JetBlue also tried to work with the DOJ before the trial & had no luck. JetBlue did divestures without anyone's requests to win over Spirit agreeing to this. The DOJ was never interested in them though.

In the end, Spirit should have stayed with their Frontier merger though the DOJ probably would have tried to block that as well.

Today Spirit is saying they will be looking at restructuring. Every analyst seems to be saying they are going to declare bankruptcy.

I have no idea how the DOJ or the Judge sees this as increasing competition, which I'm all for by the way. Even if Spirit doesn't go bankrupt they cannot compete as a low fare provider anymore. They will just slowly bleed for the next several years as they sell off and are unable to grow. Same with JetBlue now as well.

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#119

Post by vlovich123 »

cjrp wrote: post #36
stevehawk wrote: post #11

Earlier quoted context omitted.

The problem is that Spirit is but going to survive 2024. Between their debt situation and a number of their A320 Neos about to be grounded thanks to a Pratt and Whitney eff-up, they won't be around long enough to keep anything competitive.

And their share price has just tanked ~50%. Maybe that was the plan all along...

I’m honestly surprised at how small the breakup fee was compared with Adobe/Figma. I guess the difference of negotiating from a position of strength vs weakness.

Re: Judge blocks JetBlue from acquiring Spirit Airlines

#120

Post by rootsudo »

dtnewman wrote: post #46

I am personally happy with this decision. I don’t love flying spirit but I respect them, ever since hearing their former CEO speak on a Planet Money podcast. He said straight up that Spirit Airlines is aiming to be the Dollar General of the skies. If you want something luxurious, go elsewhere. But he called out the other airlines who pretend like they are the Nordstrom of the skies, but don’t actually live up to that…

Well then say goodbye Spirit. They are about to enter bankruptcy.
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