Aviation Industry Updates: May 3, 2022

Spirit Rejects JetBlue

• Spirit Airlines Inc. rebuffed a $3.6 billion cash takeover bid from JetBlue Airways Corp., saying a deal likely can’t be completed, and it is sticking with plans to merge with rival budget carrier Frontier Group Holdings Inc.

• JetBlue’s offer for Spirit came with a higher price tag than Frontier’s cash-and-stock offer, which was originally valued at $2.9 billion. However, Spirit’s board said it believed there was too much risk that regulators would bar a merger with JetBlue, even after JetBlue pledged to shed assets to win regulatory approval and to pay a $200 million breakup fee if it was unable to complete the proposed acquisition for antitrust reasons.

• “After a thorough review and extensive dialogue with JetBlue, the Board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders,” Spirit Chairman Mac Gardner said Monday.

• JetBlue’s alliance with American Airlines Group Inc. in New York and Boston was of particular concern to Spirit, according to a letter from Mr. Gardner and Spirit Chief Executive Ted Christie to JetBlue CEO Robin Hayes. The Justice Department has challenged that arrangement and is suing to block it.

• “We struggle to understand how JetBlue can believe DOJ, or a court, will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier and then undertake an acquisition that will eliminate the largest [ultralow-cost] carrier.”

• JetBlue said Monday that it isn’t giving up and made the details of its latest offer public in an effort to win over Spirit shareholders.

Wall Street Journal

Allegiant Announces New Base

KEY POINTS:

• On Tuesday, ultra-low-cost carrier Allegiant Air announced plans to open a new four-aircraft base at Provo Municipal Airport (PVU) in Utah County, Utah. Possible through an investment of $95 million, the airline is set to begin base operations on November 16th later this year, and is expected to create upwards of 157 high-wage jobs for the community.

• The $95 million investment will go towards the necessary equipment, infrastructure, employees and supplies that will be needed to establish its base operations.

• The base announcement comes at a time of rapid expansion and growth for the Las Vegas-based airline. Earlier this year, the carrier announced an order of 50 Boeing 737 aircraft comprising a mix of 737-7 and 737-8-200 models—with the option for a further 50 aircraft.

Airline Geeks

Pilot Shortage Could Last Through 2030

KEY POINTS:

• Per a new report from Time, the airline industry needs to hire an average of 14,500 new pilots each year until 2030 in order to get in front of the shortage. The problem is, according to another report from ABC News, America produces only between 5,000 and 7,000 pilots annually. Further, according to the Regional Airline Association, the U.S. is likely to lose about half of its current pilots to retirement in the next 15 years.

• “The pilot shortage for the industry is real and most airlines are simply not going to be able to realize their capacity plan because there simply aren’t enough pilots, at least not for the next five plus years,” United Airlines CEO Scott Kirby said on a recent conference call. “The other really large airlines will also probably be able to attract enough pilots, but for anyone else, I just don’t think it’s mathematically possible to meet the pilot demand for the capacity plans that are out there.”

• It’s resulted in a sort of desperation among airlines — one that’s forced them to get both resourceful and, at times, scrappy, too. Some are even doling out offers to flight school students (who still haven’t earned commercial pilots licenses) for when they graduate.

Inside Hook

Avelo And Breeze Compete Head-to-Head

KEY POINTS:

• The nation’s two hottest airline startups are finally going head-to-head — and the competition is already fierce.

• Just hours after Avelo Airlines announced on Tuesday that it was launching flights from Orlando International Airport (MCO) to Charleston International Airport (CHS), Breeze Airways countered — announcing its own service that starts a week earlier and that features an introductory fare $20 cheaper. Avelo then quickly matched Breeze’s $39 fare.

• Avelo will begin service on the 317-mile hop on June 30, its first East Coast route that doesn’t touch its base at Tweed-New Haven Airport (HVN). Like all of its East Coast service, Avelo will use one of its Boeing 737-700s for the flight, which will operate on Tuesdays, Thursdays and Sundays. The flight departs Charleston at 8:40 p.m. and arrives at 10 p.m., while the return flight departs Orlando at 1:10 p.m. and arrives in Charleston at 2:30 p.m.

• “We are excited to continue our expansion in Charleston with nonstop service to Orlando,” Avelo CEO Andrew Levy said in a statement. “Avelo makes getting to Orlando easier and more affordable than ever. With our low fares and Boeing 737 jetliners, it’s the fastest and most comfortable way to get to MCO – for both your wallet and your inflight experience

The Points Guy

Weekly TSA Numbers

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