The Main Squawk: Frontier wants another chance to merge with Spirit
Frontier is in the early stages of restarting talks with Spirit about a possible merger, according to a report from The Wall Street Journal on Wednesday. The talks mark the rekindling of a discussion that ended abruptly in 2022 when Spirit tried its hand at merging with JetBlue. And we all know how that ended.
Any deal reached between the two carriers is likely to involve Spirit filing for bankruptcy. This would allow Frontier to manipulate Spirit’s balance sheet under the veil of the courts, which would reduce integration costs.
You’re on Guard! learned late-last week that Spirit is continuing talks with its bondholders over the terms of a potential bankruptcy filing.
Spirit shares were up 20% by the end of the week. Frontier shares were up 4% over the same period.
Boeing’s latest offer to the International Association of Machinists and Aerospace Workers (IAM) failed on Wednesday. Two-thirds of the Union’s members voted to reject the proposal. The offer included a 35% wage increase over four years, a 4% direct contribution, incentive pay, and a ratification bonus. Unlike the September proposal, the latest offer was put together with input from Union leadership… yet it still failed.
Boeing aerospace workers at the Company’s Washington State factories, represented by the IAM, have been on strike since September 13. According Union leadership, a major item workers want negotiated is the reinstatement of defined benefit program, otherwise known as a pension. Boeing closed-off access to its pension program for new employees in 2014.
Companies across the U.S. have been moving to 401(k) plans over defined benefit plans since the turn of the century. 401(k) plans are managed by individual employees, removing the need for a company to bear any cost. Pension funds, on the other hand, have high administrative costs generally born by the employer. Last year, only thirty-one companies in the S&P 500 continue to offer pension plans to employees, according to a Goldman Sachs analysis.
Southwest will re-shuffle its Board to appease activist investor Elliott, according to a press release issued late-last week. The announcement validated much of what Elliott was trying to accomplish, and includes half of the directors it wanted on the board.
In what appears to be a truce, Elliott shut down its Stronger Southwest website. The website was formerly home to its manifesto on how to better the Dallas-based Airline. The website has been redirecting to the Airline’s press release on PR Newswire since the announcement.
Delta is suing CrowdStrike for $500 million in damages caused by a faulty software update released earlier this summer. The update, which caused blue screens of death across the globe, impacted Delta more than any other U.S. carrier. The Atlanta-based airline said the ensuing outage affected 1.3 million people and millions of dollars in “reputational harm and future revenue loss.”
Translation: Delta’s feelings got hurt, and it wants to do something about it.
The two companies tried to settle out-of-court, but after Delta CEO Ed Bastian made comments about how that was going, they now seem headed for the courtroom.
Source: Smishra1 via Wikipedia. License: CC BY-SA 4.0.
American CEO Robert Isom wants to increase capacity in New York and absolutely no one believes him. During last week’s earnings call, an analyst from J.P. Morgan asked the CEO for clarity on exactly what he meant by those remarks, citing the Airline’s inherit weakness in the New York metro area.
Mr. Isom was not given the opportunity to pass the mic to COO David Seymour, or more fittingly Chief Strategy Officer Steve Johnson.
“Our network connects customers worldwide, backed by premier partnerships in major business and travel destinations.”
American CEO Robert Isom in response to analyst’s question about the Company’s inherit weakness in New York
The analyst found Mr. Isom’s answer unsatisfactory and added that he hopes management “elevates its commitment to addressing [the New York market] soon.” When pressed for further comment, in a cop-out move the CEO opted to blame Boeing.
Alaska is implementing a 50-minute check-in rule for domestic flights, and a 60-minute check-in rule for international flights.
Delta is launching a route between Boston and São Paulo-Guarulhos in January.
Hawaiian will lay off seventy-three workers following its merger with Alaska.
Spirit is selling twenty-three airplanes over the next six months in an effort to raise cash. The Miramar-based airline will also shed twenty-four routes over the next three months.
United began service between Newark and Marrakech.
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