airplaneboy wrote:

Neither airline is profitable on their own as it is, while their competitors have been producing record profits. B6 and NK need one another to be a more viable competitor nationwide. As others have noted many times in these forums, the ULCC model is very finite in the US market — primarily due to their inability to sustain low labor costs long term. If Spirit can’t remain profitable in their present form, I don’t think the DOJ would view its merging with B6 unfavorably. Within the context of consumer interests, a stronger combined entity to compete against the Big 4 is better than a money losing NK (and money losing B6).

Stop making sense!!!

This is exactly what it is! And the case can be presented very strongly.

santi319 wrote:

airplaneboy wrote:

Neither airline is profitable on their own as it is, while their competitors have been producing record profits. B6 and NK need one another to be a more viable competitor nationwide. As others have noted many times in these forums, the ULCC model is very finite in the US market — primarily due to their inability to sustain low labor costs long term. If Spirit can’t remain profitable in their present form, I don’t think the DOJ would view its merging with B6 unfavorably. Within the context of consumer interests, a stronger combined entity to compete against the Big 4 is better than a money losing NK (and money losing B6).

Stop making sense!!!

This is exactly what it is! And the case can be presented very strongly.

B6 was profitable for Q3…..

18C36C wrote:

B6 was profitable for Q3…..

Yep, now if they can earn about 492 million in the 4th quarter, they'll break even for the year......

TYWoolman wrote:

IADCA wrote:

TYWoolman wrote:

I agree, taking out a ULCC is a substantial risk as part of any merger proposal. B6 is counting on the hope that the DOJ will not pass on the opportunity to bring more substantial competition to the increasing market power of the US3 through a larger, full-service network created by the acquisition of NK; that this is the last opportunity for the start of a strong 4th network carrier. B6 CEO Hayes has been tailoring his wording ever since the hostile bid to reflect this understanding. It's definitely a solid argument on paper. But they lack the frequent flyer base and international networks the other players have. (Enter: NEA, of course). So B6 may flip the argument on DOJ and say: the continuation effect of an NK standalone may present in perpetuity the US3 to substantially less competition if it weren't for the opportunity presented today: B6 acquiring NK.

There is zero chance of that argument persuading the current DOJ staff and management. None. Saying you're creating more competition by creating another behemoth in a concentrated market is not an argument even worth making to the current regime.

They would just respond by saying you are creating even better conditions for coordinated interaction among the remaining players - and on that score, they'd be more or less indisputably right - as well as substantially raising barriers to effective entry (and they'd probably be right on that too). In fact, they'll be saying that anyway if they choose to sue.

Ok, then. So by that logic: NEA will not be APPROVED That will be the litmus test of the administration.

Wrong again, because that is not a Clayton Act case. It's not a merger. It's a Sherman Act Section 1 case, which has a different legal standard.

The two cases have a business linkage - and the result of the NEA case will absolutely impact the B6/NK deal analysis - but they are not legally the same. They're literally under different laws.

Vicenza wrote:

IADCA wrote:

Also, "ULCCs didn't create that market, they manifested it" is word salad. They didn't create the DEMAND, but they absolutely created that market segment. There is no "market" if there is not a producer and a consumer for a product, because a market requires that there actually be able to be transactions that can take place.

With respect, that is utter nonsense and indeed you have it reversed. ULCC's and LCC's most certainly did NOT create the market for economy air travel.....it has existed since at least the mid-1960's (where do you think APEX especially came from?). They did, however, much later, went a long way in creating the demand for air travel, by making it affordable to many millions worldwide who had been previously priced out by collusion, and indeed regulation.

With respect, what you've said makes no sense because it didn't respond to what we were actually talking about. They didn't create the market for economy air travel. Of course not.

But that's not what the poster was talking about. He was talking about the rock-bottom, this-or-a-Greyhound-bus unbundled rammed-full Ryanair-of-the-US model. And they absolutely did do that.

I get that he misdescribed it as "economy" air tickets, but that's not the issue here at all. There's an obviously distinct market segment here that was completely unserved before the ULCCs. That's ultimately his mistake, but you don't need to follow him down the wrong road.

IADCA wrote:

TYWoolman wrote:

IADCA wrote:

There is zero chance of that argument persuading the current DOJ staff and management. None. Saying you're creating more competition by creating another behemoth in a concentrated market is not an argument even worth making to the current regime.

They would just respond by saying you are creating even better conditions for coordinated interaction among the remaining players - and on that score, they'd be more or less indisputably right - as well as substantially raising barriers to effective entry (and they'd probably be right on that too). In fact, they'll be saying that anyway if they choose to sue.

Ok, then. So by that logic: NEA will not be APPROVED That will be the litmus test of the administration.

Wrong again, because that is not a Clayton Act case. It's not a merger. It's a Sherman Act Section 1 case, which has a different legal standard.

The two cases have a business linkage - and the result of the NEA case will absolutely impact the B6/NK deal analysis - but they are not legally the same. They're literally under different laws.

Vicenza wrote:

IADCA wrote:

Also, "ULCCs didn't create that market, they manifested it" is word salad. They didn't create the DEMAND, but they absolutely created that market segment. There is no "market" if there is not a producer and a consumer for a product, because a market requires that there actually be able to be transactions that can take place.

With respect, that is utter nonsense and indeed you have it reversed. ULCC's and LCC's most certainly did NOT create the market for economy air travel.....it has existed since at least the mid-1960's (where do you think APEX especially came from?). They did, however, much later, went a long way in creating the demand for air travel, by making it affordable to many millions worldwide who had been previously priced out by collusion, and indeed regulation.

With respect, what you've said makes no sense because it didn't respond to what we were actually talking about. They didn't create the market for economy air travel. Of course not.

But that's not what the poster was talking about. He was talking about the rock-bottom, this-or-a-Greyhound-bus unbundled rammed-full Ryanair-of-the-US model. And they absolutely did do that.

I get that he misdescribed it as "economy" air tickets, but that's not the issue here at all. There's an obviously distinct market segment here that was completely unserved before the ULCCs. That's ultimately his mistake, but you don't need to follow him down the wrong road.

I do appreciate your insight and corrections! Since you have taken a stance that the gov't will take a hard, stringent look at this, what then in your opinion does B6 have going for it? And would NEA approval, approval that would give B6 added relevance like a major airline does in terms of frequent flyers, lounges and international routes, allow B6's argument of bringing more competition to the legacies (acquisition of NK) that more pointed/relevant/justified?

TYWoolman wrote:

IADCA wrote:

TYWoolman wrote:

Ok, then. So by that logic: NEA will not be APPROVED That will be the litmus test of the administration.

Wrong again, because that is not a Clayton Act case. It's not a merger. It's a Sherman Act Section 1 case, which has a different legal standard.

The two cases have a business linkage - and the result of the NEA case will absolutely impact the B6/NK deal analysis - but they are not legally the same. They're literally under different laws.

Vicenza wrote:

With respect, that is utter nonsense and indeed you have it reversed. ULCC's and LCC's most certainly did NOT create the market for economy air travel.....it has existed since at least the mid-1960's (where do you think APEX especially came from?). They did, however, much later, went a long way in creating the demand for air travel, by making it affordable to many millions worldwide who had been previously priced out by collusion, and indeed regulation.

With respect, what you've said makes no sense because it didn't respond to what we were actually talking about. They didn't create the market for economy air travel. Of course not.

But that's not what the poster was talking about. He was talking about the rock-bottom, this-or-a-Greyhound-bus unbundled rammed-full Ryanair-of-the-US model. And they absolutely did do that.

I get that he misdescribed it as "economy" air tickets, but that's not the issue here at all. There's an obviously distinct market segment here that was completely unserved before the ULCCs. That's ultimately his mistake, but you don't need to follow him down the wrong road.

I do appreciate your insight and corrections! Since you have taken a stance that the gov't will take a hard, stringent look at this, what then in your opinion does B6 have going for it? And would NEA approval, approval that would give B6 added relevance like a major airline does in terms of frequent flyers, lounges and international routes, allow B6's argument of bringing more competition to the legacies (acquisition of NK) that more pointed?

The major thing they have going for them is that the two carriers, even when combined, aren't that big relative to other players. There are lots of other potential arguments, but that's the biggest thing DOJ has to overcome. Even though it's a different world in terms of regulatory attitude, there's still a decisional hurdle for any judge who's going to stop this deal when DOJ didn't sue to block several much larger deals in the airline industry. That's just reality.

NEA approval would be a mixed bag but it'd be a net negative for the chances of avoiding a lawsuit (or winning one) for the deal with NK. For one, it would mean that AA is not a full competitor of the combined entity anymore. "We want to merge to challenge the big three carriers, but oh by the way one of them is an extremely close commercial partner in a large portion of the country that is also our strongest region" is not a great place to start if you're trying to get a merger approved, especially when you're trying to buy a carrier that is extremely strong in South Florida, where (a) you are also very strong, and (b) so is that extremely close Big 3 commercial partner, even if that's not part of your formal alliance.

IADCA wrote:

TYWoolman wrote:

IADCA wrote:

Wrong again, because that is not a Clayton Act case. It's not a merger. It's a Sherman Act Section 1 case, which has a different legal standard.

The two cases have a business linkage - and the result of the NEA case will absolutely impact the B6/NK deal analysis - but they are not legally the same. They're literally under different laws.



With respect, what you've said makes no sense because it didn't respond to what we were actually talking about. They didn't create the market for economy air travel. Of course not.

But that's not what the poster was talking about. He was talking about the rock-bottom, this-or-a-Greyhound-bus unbundled rammed-full Ryanair-of-the-US model. And they absolutely did do that.

I get that he misdescribed it as "economy" air tickets, but that's not the issue here at all. There's an obviously distinct market segment here that was completely unserved before the ULCCs. That's ultimately his mistake, but you don't need to follow him down the wrong road.

I do appreciate your insight and corrections! Since you have taken a stance that the gov't will take a hard, stringent look at this, what then in your opinion does B6 have going for it? And would NEA approval, approval that would give B6 added relevance like a major airline does in terms of frequent flyers, lounges and international routes, allow B6's argument of bringing more competition to the legacies (acquisition of NK) that more pointed?

The major thing they have going for them is that the two carriers, even when combined, aren't that big relative to other players. There are lots of other potential arguments, but that's the biggest thing DOJ has to overcome. Even though it's a different world in terms of regulatory attitude, there's still a decisional hurdle for any judge who's going to stop this deal when DOJ didn't sue to block several much larger deals in the airline industry. That's just reality.

NEA approval would be a mixed bag but it'd be a net negative for the chances of avoiding a lawsuit (or winning one) for the deal with NK. For one, it would mean that AA is not a full competitor of the combined entity anymore. "We want to merge to challenge the big three carriers, but oh by the way one of them is an extremely close commercial partner in a large portion of the country that is also our strongest region" is not a great place to start if you're trying to get a merger approved, especially when you're trying to buy a carrier that is extremely strong in South Florida, where (a) you are also very strong, and (b) so is that extremely close Big 3 commercial partner, even if that's not part of your formal alliance.

Makes sense. If NEA ruling proposes remedies/slot divestitures for example I would think AA/B6 can simply counter by proposing a smaller NEA whereby AA holds onto more of its slots and perhaps portions instead relegated to codeshares rather than domestic JV. The ploy might be to push final NEA resolution until after the NK merger analysis so not to marr the merger.

TYWoolman wrote:

IADCA wrote:

TYWoolman wrote:

I do appreciate your insight and corrections! Since you have taken a stance that the gov't will take a hard, stringent look at this, what then in your opinion does B6 have going for it? And would NEA approval, approval that would give B6 added relevance like a major airline does in terms of frequent flyers, lounges and international routes, allow B6's argument of bringing more competition to the legacies (acquisition of NK) that more pointed?

The major thing they have going for them is that the two carriers, even when combined, aren't that big relative to other players. There are lots of other potential arguments, but that's the biggest thing DOJ has to overcome. Even though it's a different world in terms of regulatory attitude, there's still a decisional hurdle for any judge who's going to stop this deal when DOJ didn't sue to block several much larger deals in the airline industry. That's just reality.

NEA approval would be a mixed bag but it'd be a net negative for the chances of avoiding a lawsuit (or winning one) for the deal with NK. For one, it would mean that AA is not a full competitor of the combined entity anymore. "We want to merge to challenge the big three carriers, but oh by the way one of them is an extremely close commercial partner in a large portion of the country that is also our strongest region" is not a great place to start if you're trying to get a merger approved, especially when you're trying to buy a carrier that is extremely strong in South Florida, where (a) you are also very strong, and (b) so is that extremely close Big 3 commercial partner, even if that's not part of your formal alliance.

Makes sense. If NEA ruling proposes remedies/slot divestitures for example I would think AA/B6 can simply counter by proposing a smaller NEA whereby AA holds onto more of its slots and perhaps portions instead relegated to codeshares rather than domestic JV. The ploy might be to push final NEA resolution until after the NK merger analysis so not to marr the merger.

Too late to do push that resolution out, and it wouldn't matter if they did. If the NEA case were still open, DOJ would treat it as the status quo (the NEA exists), which is the worst-case scenario for getting the NK deal through.

And if they wanted to offer that settlement (and DOJ were inclined to take it), it would've happened months ago.

IADCA wrote:

TYWoolman wrote:

IADCA wrote:

The major thing they have going for them is that the two carriers, even when combined, aren't that big relative to other players. There are lots of other potential arguments, but that's the biggest thing DOJ has to overcome. Even though it's a different world in terms of regulatory attitude, there's still a decisional hurdle for any judge who's going to stop this deal when DOJ didn't sue to block several much larger deals in the airline industry. That's just reality.

NEA approval would be a mixed bag but it'd be a net negative for the chances of avoiding a lawsuit (or winning one) for the deal with NK. For one, it would mean that AA is not a full competitor of the combined entity anymore. "We want to merge to challenge the big three carriers, but oh by the way one of them is an extremely close commercial partner in a large portion of the country that is also our strongest region" is not a great place to start if you're trying to get a merger approved, especially when you're trying to buy a carrier that is extremely strong in South Florida, where (a) you are also very strong, and (b) so is that extremely close Big 3 commercial partner, even if that's not part of your formal alliance.

Makes sense. If NEA ruling proposes remedies/slot divestitures for example I would think AA/B6 can simply counter by proposing a smaller NEA whereby AA holds onto more of its slots and perhaps portions instead relegated to codeshares rather than domestic JV. The ploy might be to push final NEA resolution until after the NK merger analysis so not to marr the merger.

Too late to do push that resolution out, and it wouldn't matter if they did. If the NEA case were still open, DOJ would treat it as the status quo (the NEA exists), which is the worst-case scenario for getting the NK deal through.

And if they wanted to offer that settlement (and DOJ were inclined to take it), it would've happened months ago.

Not necessarily would've offered the settlement months ago. B6 is trying to get what it can get. It can always appeal judgement and I am not so sure if the NEA would necessarily have to be disbanded during appeal since it was already approved by the DOT.

TYWoolman wrote:

IADCA wrote:

TYWoolman wrote:

Makes sense. If NEA ruling proposes remedies/slot divestitures for example I would think AA/B6 can simply counter by proposing a smaller NEA whereby AA holds onto more of its slots and perhaps portions instead relegated to codeshares rather than domestic JV. The ploy might be to push final NEA resolution until after the NK merger analysis so not to marr the merger.

Too late to do push that resolution out, and it wouldn't matter if they did. If the NEA case were still open, DOJ would treat it as the status quo (the NEA exists), which is the worst-case scenario for getting the NK deal through.

And if they wanted to offer that settlement (and DOJ were inclined to take it), it would've happened months ago.

Not necessarily would've offered the settlement months ago. B6 is trying to get what it can get. It can always appeal judgement and I am not so sure if the NEA would necessarily have to be disbanded during appeal since it was already approved by the DOT.

This is getting into the territory of a different thread, but the DOT approval isn't really as helpful as the parties wish, and it's certainly no reason to justify a stay during an appeal if the court has found that the NEA violates the law.

Appealing doesn't automatically stay a judgment (beyond the automatic initial 30 day stay to allow for the possibility of an appeal), and here the equities would seem to weigh against a stay: if the NEA is illegal, enjoining it is the remedy, and that can be done immediately - you just pull the plug, basically. Then if the trial decision is overturned on appeal, the parties can re-implement: put the plug back in. (I realize it's not that simple, but this is not like unwinding a merger or certifying an election: the result is fairly easily reversible in either direction.)

I'm not seeing why a court would allow conduct that it would have just found to be illegal to continue on an ongoing basis just because the parties (or you or me) disagree. It's not like delaying the payment of a monetary judgment, where ultimately waiting isn't that much harm. The crux of DOJ's case is that there's ongoing harm.

And frankly, if they were willing and able (meaning DOJ would agree) to settle months ago for that type of settlement, they should have. Especially B6 should have. The risk/reward calculus on rejecting such a settlement impacts both the NEA and the NK deal to the point that it would have been borderline actionable for them to reject such a deal.

OK, I admit I am not as knowledgeable on the NEA as much as many/most of you are. But to my understanding, it is currently in effect, right? i.e. AA/B6 losing the suit would shut it down, rather than not having started pending resolution awaiting a go-ahead. So the market -with- the active NEA is in action, and current traffic shows its effect, yes? If so, then has competition indeed decreased, proving the DOT's case or not?
Can the NEA trial consider other factors such as the pending B6/NK merger, or is that disallowed, focusing only on the NEA and its merits alone in the current environment?

IADCA wrote:

TYWoolman wrote:

IADCA wrote:

Wrong again, because that is not a Clayton Act case. It's not a merger. It's a Sherman Act Section 1 case, which has a different legal standard.

The two cases have a business linkage - and the result of the NEA case will absolutely impact the B6/NK deal analysis - but they are not legally the same. They're literally under different laws.



With respect, what you've said makes no sense because it didn't respond to what we were actually talking about. They didn't create the market for economy air travel. Of course not.

But that's not what the poster was talking about. He was talking about the rock-bottom, this-or-a-Greyhound-bus unbundled rammed-full Ryanair-of-the-US model. And they absolutely did do that.

I get that he misdescribed it as "economy" air tickets, but that's not the issue here at all. There's an obviously distinct market segment here that was completely unserved before the ULCCs. That's ultimately his mistake, but you don't need to follow him down the wrong road.

I do appreciate your insight and corrections! Since you have taken a stance that the gov't will take a hard, stringent look at this, what then in your opinion does B6 have going for it? And would NEA approval, approval that would give B6 added relevance like a major airline does in terms of frequent flyers, lounges and international routes, allow B6's argument of bringing more competition to the legacies (acquisition of NK) that more pointed?

The major thing they have going for them is that the two carriers, even when combined, aren't that big relative to other players. There are lots of other potential arguments, but that's the biggest thing DOJ has to overcome. Even though it's a different world in terms of regulatory attitude, there's still a decisional hurdle for any judge who's going to stop this deal when DOJ didn't sue to block several much larger deals in the airline industry. That's just reality.

NEA approval would be a mixed bag but it'd be a net negative for the chances of avoiding a lawsuit (or winning one) for the deal with NK. For one, it would mean that AA is not a full competitor of the combined entity anymore. "We want to merge to challenge the big three carriers, but oh by the way one of them is an extremely close commercial partner in a large portion of the country that is also our strongest region" is not a great place to start if you're trying to get a merger approved, especially when you're trying to buy a carrier that is extremely strong in South Florida, where (a) you are also very strong, and (b) so is that extremely close Big 3 commercial partner, even if that's not part of your formal alliance.

This should be a must read for this topic.

IADCA wrote:

TYWoolman wrote:

IADCA wrote:

Too late to do push that resolution out, and it wouldn't matter if they did. If the NEA case were still open, DOJ would treat it as the status quo (the NEA exists), which is the worst-case scenario for getting the NK deal through.

And if they wanted to offer that settlement (and DOJ were inclined to take it), it would've happened months ago.

Not necessarily would've offered the settlement months ago. B6 is trying to get what it can get. It can always appeal judgement and I am not so sure if the NEA would necessarily have to be disbanded during appeal since it was already approved by the DOT.

This is getting into the territory of a different thread, but the DOT approval isn't really as helpful as the parties wish, and it's certainly no reason to justify a stay during an appeal if the court has found that the NEA violates the law.

Appealing doesn't automatically stay a judgment (beyond the automatic initial 30 day stay to allow for the possibility of an appeal), and here the equities would seem to weigh against a stay: if the NEA is illegal, enjoining it is the remedy, and that can be done immediately - you just pull the plug, basically. Then if the trial decision is overturned on appeal, the parties can re-implement: put the plug back in. (I realize it's not that simple, but this is not like unwinding a merger or certifying an election: the result is fairly easily reversible in either direction.)

I'm not seeing why a court would allow conduct that it would have just found to be illegal to continue on an ongoing basis just because the parties (or you or me) disagree. It's not like delaying the payment of a monetary judgment, where ultimately waiting isn't that much harm. The crux of DOJ's case is that there's ongoing harm.

And frankly, if they were willing and able (meaning DOJ would agree) to settle months ago for that type of settlement, they should have. Especially B6 should have. The risk/reward calculus on rejecting such a settlement impacts both the NEA and the NK deal to the point that it would have been borderline actionable for them to reject such a deal.

Agree again.

I suspect that the DOJ isn’t open to settling, or at least not open to reaching agreement that B6 would find acceptable, for two reasons.

1. The political optics of the DOJ’s prior public statements about merger settlements
2. Strategically, they want to better understand the court’s willingness to intervene in airline mergers, given the precedent of prior mergers. A lot has changed since the prior mergers, but it’s not clear that things have changed so much that the consumer is harmed by this consolidation.

I think the case against the NEA is stronger than the case against the NK/B6 merger.

tlecam wrote:

I think the case against the NEA is stronger than the case against the NK/B6 merger.

Which is why the NEA will be the “sacrifice” for the merger to go ahead. And Jetblue knew this all along but they don’t care because the merger is bigger than that in so many ways.

santi319 wrote:

tlecam wrote:

I think the case against the NEA is stronger than the case against the NK/B6 merger.

Which is why the NEA will be the “sacrifice” for the merger to go ahead. And Jetblue knew this all along but they don’t care because the merger is bigger than that in so many ways.

As a business strategy, that may very well be. As a legal strategy, I’m not clear on how they would do that. The matters are distinct and as noted above by IADCA, deal with different statutes. They went to court over the NEA. They appear to be willing to go to court over the merger. Their negotiating leverage would be questionable if they were to lose the NEA.

As was noted above, the time for B6 to try to negotiate a settlement has past. If that were the legal strategy, they would have been better off proposing a deal with the DOJ to dissolve the NEA in turn for approval on the merger.

Wingtips56 wrote:

OK, I admit I am not as knowledgeable on the NEA as much as many/most of you are. But to my understanding, it is currently in effect, right? i.e. AA/B6 losing the suit would shut it down, rather than not having started pending resolution awaiting a go-ahead. So the market -with- the active NEA is in action, and current traffic shows its effect, yes? If so, then has competition indeed decreased, proving the DOT's case or not?
Can the NEA trial consider other factors such as the pending B6/NK merger, or is that disallowed, focusing only on the NEA and its merits alone in the current environment?

I am not an expert so take this with a grain of salt...

I remotely sat in on the hearing. IMO...

Plaintiffs were not focused on whether competition increased with the NEA but were relentlessly arguing (with emails showcasing within each carriers departmental correspondence) that each of AA and B6's pre-covid/pre-NEA "stand alone" plans were full of independent growth prospects with both AA and B6 targeting each other in the now-cooperating NEA markets.

To my understanding and recollection or opinion, AA/B6 made it clear the Plaintiff's witnesses did not come with evidence to disprove purported NEA benefits.

To my understanding and recollection or opinion, an expert Plaintiff witness did testify that the basis upon which benefits for the NEA has been presented was distorted/inflated since some or most of those benefits would have been realized for each carrier as a stand alone entity and therefore, imo, alleged that this was done intentionally to make the NEA look more beneficial than it really is.

Perhaps someone else can attest whether or not the judge can take into consideration the NK merger as fact or perhaps can make a judgement that makes some contingency-ruling involving mergers going forward.

tlecam wrote:

IADCA wrote:

TYWoolman wrote:

Not necessarily would've offered the settlement months ago. B6 is trying to get what it can get. It can always appeal judgement and I am not so sure if the NEA would necessarily have to be disbanded during appeal since it was already approved by the DOT.

This is getting into the territory of a different thread, but the DOT approval isn't really as helpful as the parties wish, and it's certainly no reason to justify a stay during an appeal if the court has found that the NEA violates the law.

Appealing doesn't automatically stay a judgment (beyond the automatic initial 30 day stay to allow for the possibility of an appeal), and here the equities would seem to weigh against a stay: if the NEA is illegal, enjoining it is the remedy, and that can be done immediately - you just pull the plug, basically. Then if the trial decision is overturned on appeal, the parties can re-implement: put the plug back in. (I realize it's not that simple, but this is not like unwinding a merger or certifying an election: the result is fairly easily reversible in either direction.)

I'm not seeing why a court would allow conduct that it would have just found to be illegal to continue on an ongoing basis just because the parties (or you or me) disagree. It's not like delaying the payment of a monetary judgment, where ultimately waiting isn't that much harm. The crux of DOJ's case is that there's ongoing harm.

And frankly, if they were willing and able (meaning DOJ would agree) to settle months ago for that type of settlement, they should have. Especially B6 should have. The risk/reward calculus on rejecting such a settlement impacts both the NEA and the NK deal to the point that it would have been borderline actionable for them to reject such a deal.

Agree again.

I suspect that the DOJ isn’t open to settling, or at least not open to reaching agreement that B6 would find acceptable, for two reasons.

1. The political optics of the DOJ’s prior public statements about merger settlements
2. Strategically, they want to better understand the court’s willingness to intervene in airline mergers, given the precedent of prior mergers. A lot has changed since the prior mergers, but it’s not clear that things have changed so much that the consumer is harmed by this consolidation.

I think the case against the NEA is stronger than the case against the NK/B6 merger.

Interesting points. Could also be that the judge will be pressing for a compromise of some sort. B6 may be willing to take any settlement because
1) it may be the only way for it to maintain some relevancy to an AA partnership (perhaps codesharing is the settlement, for example) as that was one of the key points Plaintiffs were trying to make (codeshare vs unprecedented domestic JV).
2) hoping for an evidentiary precedent via some good words the judge may have about the NEA (despite potential remedies) and how then that may be used later by B6 to argue it can extend those benefits through merger with NK.

tlecam wrote:

santi319 wrote:

tlecam wrote:

I think the case against the NEA is stronger than the case against the NK/B6 merger.

Which is why the NEA will be the “sacrifice” for the merger to go ahead. And Jetblue knew this all along but they don’t care because the merger is bigger than that in so many ways.

As a business strategy, that may very well be. As a legal strategy, I’m not clear on how they would do that. The matters are distinct and as noted above by IADCA, deal with different statutes. They went to court over the NEA. They appear to be willing to go to court over the merger. Their negotiating leverage would be questionable if they were to lose the NEA.

As was noted above, the time for B6 to try to negotiate a settlement has past. If that were the legal strategy, they would have been better off proposing a deal with the DOJ to dissolve the NEA in turn for approval on the merger.

I'll tell you why it went to court. Because B6 is cheap and they aren't going to pay a half a billion dollar break-up fee to American if JetBlue initiated it. However, the government can break it up and JetBlue is not liable anymore to paythe break-up fee. That's why the lackluster defense by JetBlue counsel during the trial.

B6twufa wrote:

tlecam wrote:

santi319 wrote:

Which is why the NEA will be the “sacrifice” for the merger to go ahead. And Jetblue knew this all along but they don’t care because the merger is bigger than that in so many ways.

As a business strategy, that may very well be. As a legal strategy, I’m not clear on how they would do that. The matters are distinct and as noted above by IADCA, deal with different statutes. They went to court over the NEA. They appear to be willing to go to court over the merger. Their negotiating leverage would be questionable if they were to lose the NEA.

As was noted above, the time for B6 to try to negotiate a settlement has past. If that were the legal strategy, they would have been better off proposing a deal with the DOJ to dissolve the NEA in turn for approval on the merger.

I'll tell you why it went to court. Because B6 is cheap and they aren't going to pay a half a billion dollar break-up fee to American if JetBlue initiated it. However, the government can break it up and JetBlue is not liable anymore to paythe break-up fee. That's why the lackluster defense by JetBlue counsel during the trial.

That sounds like being prudent rather than being cheap.

VS11 wrote:

B6twufa wrote:

tlecam wrote:

As a business strategy, that may very well be. As a legal strategy, I’m not clear on how they would do that. The matters are distinct and as noted above by IADCA, deal with different statutes. They went to court over the NEA. They appear to be willing to go to court over the merger. Their negotiating leverage would be questionable if they were to lose the NEA.

As was noted above, the time for B6 to try to negotiate a settlement has past. If that were the legal strategy, they would have been better off proposing a deal with the DOJ to dissolve the NEA in turn for approval on the merger.

I'll tell you why it went to court. Because B6 is cheap and they aren't going to pay a half a billion dollar break-up fee to American if JetBlue initiated it. However, the government can break it up and JetBlue is not liable anymore to paythe break-up fee. That's why the lackluster defense by JetBlue counsel during the trial.

That sounds like being prudent rather than being cheap.

I might add it also sounds like AA dragging B6 through this thing because AA's relevancy has more to lose imo.

TYWoolman wrote:

VS11 wrote:

B6twufa wrote:

I'll tell you why it went to court. Because B6 is cheap and they aren't going to pay a half a billion dollar break-up fee to American if JetBlue initiated it. However, the government can break it up and JetBlue is not liable anymore to paythe break-up fee. That's why the lackluster defense by JetBlue counsel during the trial.

That sounds like being prudent rather than being cheap.

I might add it also sounds like AA dragging B6 through this thing because AA's relevancy has more to lose imo.

keep in mind that JetBlue actually wants those AA slots in NYC. It really wants them. The one that it doesn't care for is BOS, since it's already got all the gate assets it needs. But AA really wants to make sure BOS is part of the NEA. Also, my understanding is DOJ is more concerned about anti-competition at BOS than it is out of NYC.

tphuang wrote:

TYWoolman wrote:

VS11 wrote:

That sounds like being prudent rather than being cheap.

I might add it also sounds like AA dragging B6 through this thing because AA's relevancy has more to lose imo.

keep in mind that JetBlue actually wants those AA slots in NYC. It really wants them. The one that it doesn't care for is BOS, since it's already got all the gate assets it needs. But AA really wants to make sure BOS is part of the NEA. Also, my understanding is DOJ is more concerned about anti-competition at BOS than it is out of NYC.

That’s an interesting thought about AA and BOS. While AA may not be #1 in BOS anymore, it’s not a distant #3 either. It flies a lot of large planes to its hubs and has added back some non-hub flying, including LHR. B6 does add a lot of dots ex-BOS. May help with corporate contract discussions.

Could someone explain how Delta having almost half of LGA slots is not an issue, but AA and B6 combined having not even 27% market share is?

B6twufa wrote:

tlecam wrote:

santi319 wrote:

Which is why the NEA will be the “sacrifice” for the merger to go ahead. And Jetblue knew this all along but they don’t care because the merger is bigger than that in so many ways.

As a business strategy, that may very well be. As a legal strategy, I’m not clear on how they would do that. The matters are distinct and as noted above by IADCA, deal with different statutes. They went to court over the NEA. They appear to be willing to go to court over the merger. Their negotiating leverage would be questionable if they were to lose the NEA.

As was noted above, the time for B6 to try to negotiate a settlement has past. If that were the legal strategy, they would have been better off proposing a deal with the DOJ to dissolve the NEA in turn for approval on the merger.

I'll tell you why it went to court. Because B6 is cheap and they aren't going to pay a half a billion dollar break-up fee to American if JetBlue initiated it. However, the government can break it up and JetBlue is not liable anymore to paythe break-up fee. That's why the lackluster defense by JetBlue counsel during the trial.

Do you know how much lawyers cost? There is nothing cheap about going to court.

tphuang wrote:

TYWoolman wrote:

VS11 wrote:

That sounds like being prudent rather than being cheap.

I might add it also sounds like AA dragging B6 through this thing because AA's relevancy has more to lose imo.

keep in mind that JetBlue actually wants those AA slots in NYC. It really wants them. The one that it doesn't care for is BOS, since it's already got all the gate assets it needs. But AA really wants to make sure BOS is part of the NEA. Also, my understanding is DOJ is more concerned about anti-competition at BOS than it is out of NYC.

True on DOJ and Boston. The emphasis there is that Boston not slot-controlled so AA and B6 have had equal opportunity to grow so then why the partnership.

What does everyone think the merger will do to the NK operation in LAS? I expect it to get cut but it would be nice for B6 to keep a big presence here.

Don’t forget Robin Hayes stated, I believe in an internal communication to Spirit employees, they don’t plan on closing bases. So DTW, ORD, DFW, IAH, ATL, and ACY are safe too……….

socaljoeyb wrote:

What does everyone think the merger will do to the NK operation in LAS? I expect it to get cut but it would be nice for B6 to keep a big presence here.

Most of the markets that have NK nonstop service already have F9 nonstop service out of LAS, but there are some destinations served nonstop out of LAS by NK that don't currently have F9 nonstop service out of LAS such as BOI/BOS/ORD/CMH/LAX/SDF/EWR/PIT.

BOI still has less-than-daily G4 nonstop service to LAS, and G4 will be resuming SDF-LAS nonstop service in June 2023.

F9 does have nonstop service to LAS from MDW in the Chicago market and from BUR/ONT/SNA in the Greater Los Angeles market.

NK is currently the only ULCC serving LAS nonstop from the BOS/CMH/NYC/PIT markets.

CATIIIevery5yrs wrote:

Don’t forget Robin Hayes stated, I believe in an internal communication to Spirit employees, they don’t plan on closing bases. So DTW, ORD, DFW, IAH, ATL, and ACY are safe too……….

That sounds ideal but also not credible that he will follow through with that on so many levels.

I mean, they are becoming an entirely new carrier. Spirit will now be JetBlue. What makes Hayes think former Spirit flyers will now take all of their business to JetBlue–an airline that yes, offers a great product, but also has uncompetitive, bloated CASM that translates to higher fares?

JetBlue will no longer be competing for the ULCC market segment that Spirit successfully competed for at each of these airports, because let's be real–they aren't a ULCC. Whatever mkt share they steal away is going to come from the majors and maybe WN. They're going to be caught between F9 and on one end and the legacies on the other end. And the problem is these airports mentioned other than ACY are already dominated by legacy (and ulcc) hubs with lots of spokes/network breadth. I'm excluding NK, of course:

DTW-DL
ORD-UA/AA
DFW-AA/F9
IAH-UA
ATL-DL/WN/F9
LAS-WN/F9

I think the only airports here that have a real chance of being a success are LAS (lack of more premium options that B6 could provide) and ORD (lack of lower-cost options that B6 could provide).

My view is that the merger will happen, but it'll just be incredibly hard for Robin Hayes to keep his word of "no base closures" when the truth is that JetBlue simply can't compete to the level that Spirit can. They are different products for totally different markets, and if/when JetBlue goes into these hubs with a mindset of no closures, they will find themselves competing with the big boys in a very unsustainable situation.

floridaflyboy wrote:

All true, of course, B6 won't be reviewing NK's markets for whether they can continue to serve them as a ULCC. They'll be reviewing them to see if they can serve them with B6's cost structure, business model and price point. I think they'll also take a close look at whether or not they can route some connections via LAS profitably.

Just based anecdotally on the crowd I know that goes to LAS, it runs the gamut from people going for the cheapest possible weekend getaway they can get all the way to folks who are booking ultra expensive extravagant vacations. I think LAS is kind of uniquely set up that it has room for B6's "in-between" business model.

Could not have said this better.

sfojvjets wrote:

I mean, they are becoming an entirely new carrier. Spirit will now be JetBlue. What makes Hayes think former Spirit flyers will now take all of their business to JetBlue–an airline that yes, offers a great product, but also has uncompetitive, bloated CASM that translates to higher fares?

JetBlue will no longer be competing for the ULCC market segment that Spirit successfully competed for at each of these airports, because let's be real–they aren't a ULCC. Whatever mkt share they steal away is going to come from the majors and maybe WN. They're going to be caught between F9 and on one end and the legacies on the other end. And the problem is these airports mentioned other than ACY are already dominated by legacy (and ulcc) hubs with lots of spokes/network breadth. I'm excluding NK, of course:

DTW-DL
ORD-UA/AA
DFW-AA/F9
IAH-UA
ATL-DL/WN/F9
LAS-WN/F9

I think the only airports here that have a real chance of being a success are LAS (lack of more premium options that B6 could provide) and ORD (lack of lower-cost options that B6 could provide).

In addition to the AA ORD/DFW and UA ORD/IAH hubs, WN also has hubs at MDW, DAL, and HOU in the Chicago, Dallas/Fort Worth, and Houston markets.

WN already has nonstop service out of MDW (in addition to AA/UA nonstop service out of ORD) to all of the markets that NK still serves nonstop from ORD, and WN also operates ORD-DAL/FLL/RSW/LAS/MCO/PHX/TPA nonstop service.

CATIIIevery5yrs wrote:

Don’t forget Robin Hayes stated, I believe in an internal communication to Spirit employees, they don’t plan on closing bases. So DTW, ORD, DFW, IAH, ATL, and ACY are safe too……….

And Delta promised that Memphis wouldn't close. And United promised to keep Cleveland open. And so on. Those promises are meaningless.

TonyClifton wrote:

11C wrote:

TonyClifton wrote:

Spirit is hemorrhaging pilots. Lost 60 hired 90 (roughly) for September. Not very cost effective to hire 3 pilots for every two you lose.

That aligns well with Spirit’s claim that pilot wages will remain level. Meanwhile, JG was trying to make the case that attrition at B6 was the new norm, while RH was saying that pilot wages would certainly go up. Good cop, bad cop variation?

Its a difficult situation, they either continue to lose pilots hand over fist, or greatly increase compensation, while both carriers posted a loss in Q2.

Posting a Loss? Is next to nothing if they can't fly their line due to NO PILOTS! You can't pick fly poop out of pepper and claim anything else. Whatever it takes to stop Losing Pilots? Then they'd better get on it!

strfyr51 wrote:

TonyClifton wrote:

11C wrote:

That aligns well with Spirit’s claim that pilot wages will remain level. Meanwhile, JG was trying to make the case that attrition at B6 was the new norm, while RH was saying that pilot wages would certainly go up. Good cop, bad cop variation?

Its a difficult situation, they either continue to lose pilots hand over fist, or greatly increase compensation, while both carriers posted a loss in Q2.

Posting a Loss? Is next to nothing if they can't fly their line due to NO PILOTS! You can't pick fly poop out of pepper and claim anything else. Whatever it takes to stop Losing Pilots? Then they'd better get on it!

I agree wholeheartedly. They’re going to have to figure out how to make it work.

Las will be kept as a focus city. No doubt about that. Lax is the big focus city for them on west coast. I have also consistently said that sfo will happen too.

11725Flyer wrote:

CATIIIevery5yrs wrote:

Don’t forget Robin Hayes stated, I believe in an internal communication to Spirit employees, they don’t plan on closing bases. So DTW, ORD, DFW, IAH, ATL, and ACY are safe too……….

And Delta promised that Memphis wouldn't close. And United promised to keep Cleveland open. And so on. Those promises are meaningless.

An agreement that was negotiated in September 2010 only required UA to keep the CLE hub for 5 years after the closing of the UA-CO merger (which occurred on 10/1/2010), and that agreement can be found at http://media.cleveland.com/business_imp ... 282%29.pdf.

An article from February 2014 stated that one of the reasons why UA made the final decision to dehub CLE was that "Cleveland does not have enough connecting traffic to justify keeping a hub here", and that article can be found at https://www.cleveland.com/metro/2014/02 ... _is_f.html.

jplatts wrote:

11725Flyer wrote:

CATIIIevery5yrs wrote:

Don’t forget Robin Hayes stated, I believe in an internal communication to Spirit employees, they don’t plan on closing bases. So DTW, ORD, DFW, IAH, ATL, and ACY are safe too……….

And Delta promised that Memphis wouldn't close. And United promised to keep Cleveland open. And so on. Those promises are meaningless.

An agreement that was negotiated in September 2010 only required UA to keep the CLE hub for 5 years after the closing of the UA-CO merger (which occurred on 10/1/2010), and that agreement can be found at http://media.cleveland.com/business_imp ... 282%29.pdf.

An article from February 2014 stated that one of the reasons why UA made the final decision to dehub CLE was that "Cleveland does not have enough connecting traffic to justify keeping a hub here", and that article can be found at https://www.cleveland.com/metro/2014/02 ... _is_f.html.

Thanks for providing the links!

sfojvjets wrote:

floridaflyboy wrote:

All true, of course, B6 won't be reviewing NK's markets for whether they can continue to serve them as a ULCC. They'll be reviewing them to see if they can serve them with B6's cost structure, business model and price point. I think they'll also take a close look at whether or not they can route some connections via LAS profitably.

Just based anecdotally on the crowd I know that goes to LAS, it runs the gamut from people going for the cheapest possible weekend getaway they can get all the way to folks who are booking ultra expensive extravagant vacations. I think LAS is kind of uniquely set up that it has room for B6's "in-between" business model.

Could not have said this better.

This!

I think B6 could establish a little niche @ LAS….. Nothing huge, but I do really think they could make this station work as a little premium outpost.

There will have to be a Midwest focus city but it will be somewhere without an existing connecting bank. BNA and STL have too big of a WN presence. Maybe KC or IND.

Much of Spirits existing network will get erased, this purchase is an injection of planes into the JetBlue expansion plan. Finish our existing focus cities/hubs then add new ones in middle America.

strangeplanes wrote:

There will have to be a Midwest focus city but it will be somewhere without an existing connecting bank. BNA and STL have too big of a WN presence. Maybe KC or IND.

Much of Spirits existing network will get erased, this purchase is an injection of planes into the JetBlue expansion plan. Finish our existing focus cities/hubs then add new ones in middle America.

ORD seems like the most obvious one to me, despite being more competitive. It’s an existing Spirit base. Moreover, demographically and economically it is the market most similar to NYC/BOS. I think they would have a better shot at making their business model work in Chicago than Kansas City.

RyanairGuru wrote:

strangeplanes wrote:

There will have to be a Midwest focus city but it will be somewhere without an existing connecting bank. BNA and STL have too big of a WN presence. Maybe KC or IND.

Much of Spirits existing network will get erased, this purchase is an injection of planes into the JetBlue expansion plan. Finish our existing focus cities/hubs then add new ones in middle America.

ORD seems like the most obvious one to me, despite being more competitive. It’s an existing Spirit base. Moreover, demographically and economically it is the market most similar to NYC/BOS. I think they would have a better shot at making their business model work in Chicago than Kansas City.

I see ORD as being hard to jump into with that level of competition but local demand would be stronger

11725Flyer wrote:

And Delta promised that Memphis wouldn't close

What Delta "promised" was to keep MEM (and CVG) as hubs for at least five years. Seems they managed that.

strangeplanes wrote:

There will have to be a Midwest focus city but it will be somewhere without an existing connecting bank. BNA and STL have too big of a WN presence. Maybe KC or IND.

Much of Spirits existing network will get erased, this purchase is an injection of planes into the JetBlue expansion plan. Finish our existing focus cities/hubs then add new ones in middle America.

Could DTW work over ORD?

LexPassenger wrote:

11725Flyer wrote:

And Delta promised that Memphis wouldn't close

What Delta "promised" was to keep MEM (and CVG) as hubs for at least five years. Seems they managed that.

Do you have a source for this info? I can assure you when Anderson came to MEM after the merger was announced, nothing was said of a 5 year “promise”.

Poorpilot wrote:

Do you have a source for this info?

It was a response to a question during congressional hearings. Delta managed it, just barely. But I think everyone assumed the writing was on the wall for MEM and CVG, what with Atlanta and Detroit duplicating most of the same flows, and being such much more important stations. Now, back to THIS merger....

LexPassenger wrote:

Poorpilot wrote:

Do you have a source for this info?

It was a response to a question during congressional hearings. Delta managed it, just barely. But I think everyone assumed the writing was on the wall for MEM and CVG, what with Atlanta and Detroit duplicating most of the same flows, and being such much more important stations. Now, back to THIS merger....

So that’s a no? Just curious. When people make general or specific statements I like to see sources. Here are some sources for you after a quick google search that prove Anderson lied to regulators and congressmen and women. Will anything ever happen, no, but it’s something to consider and/or think about before any large, publicly held business merger or acquisition.

https://www.usatoday.com/story/todayint ... b/2390515/

https://www.memphisdailynews.com/news/2 ... port/print

https://cohen.house.gov/press-release/c ... dam-flight

https://www.memphisdailynews.com/editor ... x?id=37421

Now back to the original merger topic, I hope JB keeps all the Spirit bases, but the more realistic outcome is that some will close. The industry is absolutely crazy right now as all the majors, legacies and cargo airlines are seeing record hiring as well as record attrition. It’s a pilots’ game right now.

18C36C wrote:

strangeplanes wrote:

There will have to be a Midwest focus city but it will be somewhere without an existing connecting bank. BNA and STL have too big of a WN presence. Maybe KC or IND.

Much of Spirits existing network will get erased, this purchase is an injection of planes into the JetBlue expansion plan. Finish our existing focus cities/hubs then add new ones in middle America.

Could DTW work over ORD?

I'm biased as I'm a Detroiter... but I think NK/JB would be successful in using DTW as a focus city. NK already have a large presence, uses a nicer newer terminal with space, both airlines are well known (I believe JB have been growing gradually here , but don't quote me) and NK have a new purpose built maintenance hangar.

Locally and anecdotally SE Michigan to Florida traffic is huge with DL charging premiums and I believe using nothing smaller than a 739 to the FL cities they serve. Without Spirits current network here, Detroit would only have Frontier as the ULCC competing with DL.

I also think off the top of my head, there's incentives or subsidies being offered here at the moment... I think someone mentioned on the DTW thread that's how we just obtained icelandair service, I wonder if DTW would offer some kind of incentive for NK/JB to stay and grow?

bhxdtw wrote:

18C36C wrote:

strangeplanes wrote:

There will have to be a Midwest focus city but it will be somewhere without an existing connecting bank. BNA and STL have too big of a WN presence. Maybe KC or IND.

Much of Spirits existing network will get erased, this purchase is an injection of planes into the JetBlue expansion plan. Finish our existing focus cities/hubs then add new ones in middle America.

Could DTW work over ORD?

I'm biased as I'm a Detroiter... but I think NK/JB would be successful in using DTW as a focus city. NK already have a large presence, uses a nicer newer terminal with space, both airlines are well known (I believe JB have been growing gradually here , but don't quote me) and NK have a new purpose built maintenance hangar.

Locally and anecdotally SE Michigan to Florida traffic is huge with DL charging premiums and I believe using nothing smaller than a 739 to the FL cities they serve. Without Spirits current network here, Detroit would only have Frontier as the ULCC competing with DL.

I also think off the top of my head, there's incentives or subsidies being offered here at the moment... I think someone mentioned on the DTW thread that's how we just obtained icelandair service, I wonder if DTW would offer some kind of incentive for NK/JB to stay and grow?

I think B6 could give DL a run for their money on the Florida routes….. maybe even a few premium transcons - B6 setting up (a larger shop) Might drive down DLs prices, also…