Aviation Industry Updates: Jan 30, 2024

JetBlue Suggests Merger Agreement With Spirit Could Be Terminated

KEY POINTS:

• JetBlue on Friday said for the first time that its agreement to purchase Spirit Airlines for $3.8 billion may collapse, signaling that the New York-based airline may be looking to pull out of the deal.
• In a filing with the Securities and Exchange Commission, JetBlue said that certain conditions had not been met by the deadlines required by the merger agreement, which could allow the airline to terminate the deal by Sunday.
• The airline added that it was still assessing its options under the agreement and would continue to abide by it.
• In its own filing, Spirit said that it disagrees and believes there is "no basis" for killing the deal. Spirit shares were down more than 17% Friday morning, while JetBlue shares were up nearly 2%.
• The merger, which the airlines agreed to in the spring of 2022, was blocked earlier this month by a federal judge following a monthlong antitrust trial.
• JetBlue and Spirit said they would appeal the decision, with JetBlue describing the process as "consistent with the requirements of the merger agreement."

United CEO Kickstarts Airbus Talks Amid Boeing Delays

KEY POINTS:

• United Airlines has approached Airbus about buying more A321neo jets to fill a potential void left by the delayed Boeing (NYSE:BA) 737 MAX 10, in a trade-off likely to ease deadlock over a long-delayed separate order for larger A350s, industry sources said.
• United CEO Scott Kirby (NYSE:KEX) flew to Toulouse recently to sound out the planemaker on a potential quid-quo-pro deal after a mid-air emergency on an Alaska Airlines 737 MAX 9 raised new doubts over certification of the already delayed MAX 10, they said.
• "United Airlines has been in talks with Airbus about possible alternatives to the MAX 10 order. To my knowledge no agreement has been reached," a person familiar with the discussions said.
• Talks embracing a potential sale of some A321neo jets and the status of United's previously ordered A350s are at an early stage and there is no guarantee of a deal, the sources said.
• Airbus and United Airlines declined to comment.
• Kirby's previously unreported trip to Toulouse is the latest twist in a widening crisis engulfing Boeing as the planemaker seeks to reassure the public and regulators about production quality and safety while preventing key orders unravelling.
• Kirby last week called the MAX 9's partial grounding "the straw that broke the camels back" following certification delays to the MAX 10, the largest member of a jet family tarnished by an earlier safety crisis caused by two fatal crashes.
• United has not cancelled any of the 277 MAX 10 jets it has on order, but it has removed them from internal plans, Kirby told reporters last week, leaving questions over how it would fill the gap at a time when rival Airbus is heavily sold out.

Investing

Ryanair Tells Boeing It Would Buy Any MAX 10 Orders Dropped By US Airlines

KEY POINTS:

• Ryanair has told Boeing (NYSE:BA) that if any U.S. customers refuse to take delivery of 737 MAX 10 aircraft, that it would buy them "at the right price," executives said on Monday.
• The Irish airline, Europe's largest by passenger numbers, already has 150 firm orders for the MAX 10, the largest jet in the 737 family, and options for 150 more, with the first deliveries due in 2027.
• It said it expects the jet to be certified by the end of the year and flying early next year despite the Federal Aviation Administration's now-lifted grounding of MAX 9 jets following the mid-air blowout of a cabin panel on a new Alaska Airlines plane.
• United Airlines CEO Scott Kirby (NYSE:KEX), whose carrier has ordered 277 MAX 10 jets with options for another 200, said last week his airline would build a new fleet plan that does not include the model, which had already been mired in regulatory and delivery delays before the Alaska Airlines incident.
• "We have told them if some of these American airlines don't want to take the MAX 10 aircraft, Ryanair will take those aircraft," Ryanair Group Chief Executive Michael O'Leary said in a presentation on the airline's quarterly results.
• He described the MAX 10 as "transformational" and said Boeing would always make great aircraft "but quality does need to be improved."
• Ryanair Chief Financial Officer Neil Sorahan said the comments last week by United's Kirby were "unhelpful."
• "If Scott Kirby doesn't want to take his MAX 10s, then we'll very happily take them at the right price," Sorahan said in an interview.

Investing

American Airlines Stock Surges 10% As Strong Demand Drives 2024 Profit Forecast

KEY POINTS:

• American Airlines on Thursday posted a $19 million profit for the last three months of 2023.
• The airline beat Wall Street estimates on the top and bottom lines.
• The earnings report comes on a busy day for the airline industry, with Southwest and Alaska also reporting fourth-quarter earnings.

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