Aviation Industry Updates: February 8, 2022

Spirit and Frontier Plan to Merge

• Spirit and Frontier Airlines on Monday announced a $6.6 billion merger, a combination of low-fare carriers that would create America's fifth-largest airline.

• The companies have yet to say what brand they'll fly under or who would lead management of the new airline. The combined company would offer more than 1,000 daily flights to over 145 destinations.

• The merged carrier would leapfrog JetBlue (JBLU) and Alaska Air (ALK) in the number of miles flown by paying passengers, according to 2021 statistics, putting them behind the four major airlines that control about 80% of the nation's air traffic -- American (AAL), Delta (DAL), United (UAL) and Southwest Airlines (LUV).

• "This transaction is centered around creating an aggressive ultra-low fare competitor to serve our guests even better, expand career opportunities for our team members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public," said Spirit CEO Ted Christie.

• It is also not clear that the merger will be approved by federal antitrust regulators. The Biden administration has taken a much more aggressive approach on antitrust issues. It recently blocked an alliance between American and JetBlue that fell short of a full merger. Increasing competition in the airline industry is one of the issues that the Biden administration has cited as a priority.

• Executives involved in the proposed Spirit-Frontier deal say they believe the deal will bring more competition to the industry.

• "This is the type of transaction the administration should in fact support," said Bill Franke, the chair of Frontier's board and the managing partner of Indigo Partners, Frontier's majority shareholder, in an interview Monday on CNBC. "It's beneficial to the consumers. It's beneficial to the employees. It's beneficial to the communities that the airlines serve. And at the end of the day, even in combination, these two airlines will control less than 10% of the market."

CNN

Should the pilot retirement age be raised?

KEY POINTS:

• For JetBlue Captain Guy Howes, his last flight summed up everything that is good about the airline industry, as well as the thing that troubles him the most.
  The last flight occurred on Dec. 30, 2021, two days before Howes’ 65th birthday. That’s when he had to retire.

• JetBlue let Howes set it up with his son Ryan as first officer, his origin as Boston – he wanted a good, long transcon flight – and his destination as San Diego, near his home.

• Howes is based at LAX, but “I didn’t want to land in LA in a huge terminal where I didn’t know anybody. I wanted to finish in San Diego, walk away and drive home.” At SAN, Flight 619 ended at Terminal One, where Howe met his wife Linda in 1989.

• The Boston-based pilots originally assigned to the flight agreed to ride in back so they could fly back to Boston the next day. But with the plane full, the captain gave up his seat for a passenger and spent the trip in the jump seat.

• The problem for Howes, is this: He would like to still be flying today, but the Federal Aviation Administration requires commercial pilots to retire at age 65.

• Howes — cheerful and healthy, with 40 years of commercial flying experience — has a lot of thoughts about that.

• First of all, he said, “I understand there needs to be a retirement age. I totally get it. We could have guys at 80 faking their medical reports. So there should be some cognitive and physical abilities that define when you retire, just like in any job.

• “But in this job, you get to a certain age and you’re done and you have to walk out,” he said. “That’s terrible. I hate to sound like a crybaby, to say it’s not fair. But I keep fit. I’m in good shape. I would just like to see some other criteria (than age).”

• Said Howes, “I feel fortunate that it went to 65 from 60. That was a gift. But it’s still an age when you’re done and you have to walk out, and it feels like I never quite finished.”

The Points Guy

American Buying More 737 MAX Jets | Defers Dreamliner Delivery

KEY POINTS:

• American Airlines Group Inc (AAL.O) said on Wednesday it has agreed to buy an additional 23 737 MAX 8 aircraft from Boeing Co (BA.N) by exercising existing purchase options and deferring the delivery of some 787-9 Dreamliner aircraft.

• The airline's move to boost its 737 MAX fleet comes at a time when domestic travel in the United States is staging a recovery, despite the disruption caused by the Omicron variant of the coronavirus.

• American Airlines said in a filing that it intends to convert seven more of its purchase options for the MAX this year, bringing its order of the 737 MAX 8 aircraft to 30.

• The company has deferred the delivery of Boeing's long-haul 787-9 Dreamliner aircraft that was scheduled to be handed over in January next year.

• Deliveries of aircraft will now begin in the fourth quarter of 2023 and will continue into 2027, with four 787-9 aircraft now scheduled for delivery in 2023, American said.

Reuters

United Pulls Down Transpacific Flying Through Fall

KEY POINTS:

• United Airlines has made reductions to its transpacific schedule through the fall. Particularly touching flights to China and Oceania, these reductions are not surprising but representative of the overall demand environment, and significant travel restrictions have left many unable to travel.

• United has kept a larger transpacific schedule for booking compared to its peers at Delta and American. It is not surprising to see the airline make these cuts, which put it more in line with other airlines and the overall demand environment.

• China has taken a very strict approach to the pandemic. It has forced airlines to cut flights if arriving passengers later test positive, which United was impacted by, and has strict rules that have forced US airlines to route their China flights via Seoul to avoid crew layovers in China. Even as Beijing holds the Winter Olympics, foreign spectators are largely barred from attending, and the traditional boost of capacity and flights to Olympic destinations did not materialize.

• Out of the big three US airlines, United Airlines has the largest international exposure. This served as a drag early on and raised questions over how United would respond to the border closures and travel restrictions. However, as early 2021 hit and a path to international reopenings started to appear, United took a very bullish view of its international operations. Arguing that there were fewer airlines and less capacity to compete against in most markets, the airline started to chart a return of its international system, buoyed by a unique lack of widebody aircraft retirements.

• United has shown it is willing to add flights if demand materializes. However, for now, the airline is deciding to make these cuts and will examine the overall return of passengers to the skies across the Pacific.

Simple Flying

Weekly TSA Numbers

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