Aviation Industry Updates: September 19, 2023

JetBlue Sells Off Spirit Assets in Bid to Win Merger Approval

KEY POINTS:

• JetBlue will transfer two gates each at Boston and Newark Liberty airports to Allegiant Air (ALGT), an ultra-low-cost carrier. The agreement with Allegiant also includes 43 takeoff and landing authorizations at Newark, 
• JetBlue has also agreed to cede control of five gates at Fort Lauderdale-Hollywood International Airport to the Broward County Aviation Department and will work closely with the department to expand Allegiant's presence at the airport.
• The decision came three months after JetBlue agreed to divest all of Spirit Arlines' holdings at New York's LaGuardia Airport to Frontier Airlines (ULCC).
• Last year, JetBlue won a bidding war with rival Frontier to win control of Spirit Airlines. Frontier had originally submitted a bid to acquire Spirit in February last year before JetBlue countered with an offer of its own.
• After months of push-and-pull, Spirit shareholders finally settled on JetBlue's offer in October.
  It didn't take long for the merger to run into regulatory hurdles. The Justice Department sued in March to block the merger, on grounds that it could give JetBlue a disproportionate share of the market for low-cost air travel, further concentrate the airline industry into the hands of a few firms, and lead to drastically higher fares for travelers.
• U.S. Department of Justice. "Justice Department Sues to Block JetBlue’s Proposed Acquisition of Spirit."
• If approved, a JetBlue-Spirit merger would create America's fifth-biggest airline and a low-cost juggernaut, just behind heavyweights American (AAL), Southwest (LUV), Delta (DAL), and United (UAL) airlines.

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From UPS to Detroit Three Automakers, US Labor Unions Flex Muscle

KEY POINTS:

• A tight U.S. labor market, expiration of cyclical contracts and high living costs have triggered tough negotiations for pay hikes and other benefits by workers and strikes and protests across industries.
• Some 309,700 workers have been involved in stoppages through August this year, as per preliminary U.S. Bureau of Labor Statistics data, putting 2023 on track to become the busiest year for strikes since 2019.
• Teamsters union workers at United Parcel Service (UPS.N) ratified a new five-year contract in August, a deal that raises pay, eliminates a two-tier wage system for drivers, provides another paid holiday and ends forced overtime.
• FedEx (FDX.N) pilots have been involved in a stand-off with the parcel delivery firm over wages and legacy pensions. Pilots rejected a tentative deal in July and negotiations are expected to restart.
  Pilots at several airlines including American Airlines (AAL.O), Delta Airlines (DAL.N), United Airlines Holdings (UAL.O), Spirit Airlines (SAVE.N), Jetblue Airways (JBLU.O) negotiated new job contracts this year.
• Members of some unions like the Southwest Airlines Pilots Association have voted to authorize a strike if a new contract is not reached.
• Spirit AeroSystems (SPR.N) negotiated a new contract to end a strike that led to a week-long work stoppage at its plant in Wichita, Kansas.

Reuters

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Hawaiian Sees Advantage In Amazon Pivot To Airbus Freighter

KEY POINTS:

• Hawaiian Airlines (NASDAQ: HA) received its first A330-300 freighter in July and is ready to begin flights for Amazon Air in October while air and maintenance crews finish familiarizing themselves with the aircraft and airport ground procedures for cargo. The Honolulu-based carrier will eventually operate 10 package freighters on Amazon’s behalf under a 10-year contract struck last fall. 
• Amazon (NASDAQ: AMZN) appears to have identified the A330, a midsize widebody aircraft, as the next platform for its air logistics activity. Older Boeing 767s it primarily deploys are starting to reach the end of their service life and passenger planes available to convert to a cargo configuration will soon be scarce.
• Hawaiian CEO Peter Ingram told FreightWaves that presents an opportunity for the airline to grow its Amazon business, noting that Hawaiian faced a similar decision 13 years ago when it started taking A330-200s for its passenger fleet after having flown 767s up to that point.
• “I think if you look at the Amazon fleet, you can speculate that they’re thinking about the A330-300 in their fleet as a combination of growth and also replacement of the 767s that they have been operating with various carriers throughout their network. We see the opportunity for growth. It’s going to be up to us to operate efficiently and well,” Ingram said in an interview last week on the sidelines of the U.S. Chamber of Commerce’s Global Aerospace Summit here.
• “We’re very on-time focused in our passenger business and I know Amazon is very on- time focused in their business. So the best way we can put ourselves in a position for growth in the future is by operating well, with a high completion factor and with great on-time performance. That’s something our team has been familiar with on the passenger side and we intend to do the same on the freighter side,” Ingram said.

Freight Waves

United 777 Returns To Newark After Possible Loss Of Cabin Pressure

KEY POINTS:

• United Airlines Flight 510, operating on a Boeing 777-200ER, returned to Newark after detecting a cabin pressurization issue. The pilots safely landed the aircraft with no reported injuries.
• The aircraft experienced a sudden descent from 37,000 ft to 9,000 ft within minutes following the pressurization issue. It then continued towards Newark for two hours before landing.
• The root cause of the cabin depressurization event will be determined through further investigation.

Simple Flying

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