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Aviation Industry Updates: June 14, 2022

By June 14, 2022June 21st, 2022Industry News

Spirit Pilots Make An Offer: Let Us Help You Stem Attrition

  • In a letter to Spirit CEO Ted Christie, Ryan Muller, chairman of the Spirit ALPA chapter, offered to open contracts on a new contract. The existing contract was signed March 1, 2018 and does not become amendable on March 1, 2023.

  • In the letter, Muller writes, “As you are aware, pilot attrition is at an all-time high and threatens to negatively impact airline operations, its project growth and the careers of Spirit pilots.
  • “We believe this requires our immediate attention, and we are confident that it can be jointly resolved for the mutual benefit of all stakeholders,” he wrote. “I ask that the parties immediately commence (negotiations) that will outline the terms for a potential early Section 6 opener.”
  • Muller requested a response by June 14 “so we can get the process moving forward on an accelerated schedule.”
  • Spirit pilots haven’t taken a position on the carrier’s merger future, but they don’t like what they have seen about the carrier’s plan for their futures. In a letter sent to members last month, Muller said he is concerned that Spirit has no intent to raise pilot wages over the next five years.
  • The ALPA chart shows that so far this year, 59 pilots have left Spirit for United Airlines, 54 have left for American, 49 have left for Delta, four have left for Southwest, three have left for UPS, one left for Breeze, two left for other carriers, and one left for JetBlue — which is bidding aggressively for Spirit.

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American CEO Unconcerned by Potential U.S. Recession

KEY POINTS:

  • The U.S. economic outlook has darkened in recent months after the economy unexpectedly contracted in the first quarter. That has raised some concerns about the continuity of the travel recovery, especially after the red hot summer airlines and others are forecasting.
  • But Robert Isom, CEO of American Airlines, is not losing sleep over a potential economic slowdown. The carrier improved its second quarter outlook on Friday, and maintains expectations of profits through the end of the year amid robust demand. It and other airlines are forecasting a busy summer with travelers paying as much as a third more for flights than they did last year.
  • “While there may be some concern about leveling off of growth rates, the airlines have not participated for the last 3 years in any of that growth,” Isom said at an investor conference held by Bernstein Friday. “We’re now just now getting back as an industry to within 10 percent of 2019. When you ask are you concerned, absolutely not. I see a demand for travel, and an industry that has been more or less constrained.”

Skift

FedEx Releases Statement On Potential Pilot Strike

KEY POINTS:

  • The possibility of a pilot strike led FedEx to release a statement on Friday. The statement describing “productive negotiations” with their pilot’s union:
    “FedEx remains engages in productive negotiations with our pilots’ union. These negotiations are a normal part of our business and have no impact on our service as we continue delivering for our customers around the world.
  • We will continue to negotiate in good faith with our pilots and are committed to reaching an agreement that is fair to our pilots, our other team members and all other stakeholders.”
  • The Air Line Pilots Association (ALPA) describes the role FedEx pilots have specifically played through the COVID-19 pandemic on their website:
    “Throughout the pandemic, the FedEx pilots helped keep the world economy afloat and commerce moving. Through their efforts, millions of vaccines and lifesaving medical equipment were transported around the world. Pilots endured working conditions unlike any ever seen in FedEx’s history.
  • From constant trip revisions, trip extensions, hotel isolation, close-contact protocols, personal protective equipment requirements, being sprayed with unknown chemicals, the threat of incarceration for COVID noncompliance in foreign countries, having to choose between rest and nutrition, and more, the pilots continued to deliver on FedEx’s ‘Purple Promise.’”
  • FedEx employees recently played a role in transporting shipments of baby formula during a time of crisis and shortage. Team members were present to unload the formula shipment that landed in Indiana on May 22, then transport the formula to a distribution center to ensure it’s safety.
  • “The lack of access to formula is impacting babies and families across the country, and we are proud to support the distribution of these critical items to deliver hope to those in need,” president and CEO-elect of FedEx Express Richard W. Smith said at the time.

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JetBlue vs Frontier: Who Will Win The Battle Over Spirit And Why Does It Matter?

KEY POINTS:

  • Spirit has rejected JetBlue’s $30-a-share cash offer in favor of Frontier’s cash-and-stock offer, which was valued Wednesday at about $21 a share. The reason, according to Spirit, is that JetBlue has a greater likelihood of rejection by the Justice Department. Spirit shareholders now are voting on whether to take the Frontier deal or reject it for JetBlue’s cash. On Wednesday, Spirit postponed the end of the voting from Friday to June 30 to allow “discussions with Spirit stockholders, Frontier and JetBlue.”
  • It does appear that JetBlue is basically trying to eliminate a low-fare competitor. JetBlue has offered to mitigate this by saying it would divest all assets acquired from Spirit in New York City and Boston, JetBlue’s biggest hubs.
  • The Justice Department has already sued to stop an alliance between JetBlue and American. (The alliance would mean JetBlue could use American takeoff and landing slots in New York, and the two carriers would market their service together in New York and Boston.) JetBlue realizes it can’t have assets in New York and Boston from both American and Spirit.
  • For JetBlue, the real prize of a Spirit acquisition would be the opportunity to grow in the middle part of the country. Spirit has gates in Chicago, Las Vegas, Dallas, and Houston among other cities. Not to mention, it has the planes and pilots to serve them.

The Points Guy

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