unaligned

Spirit Airlines and Frontier AirlinesMonday announced plans to merge, a combination that would create the fifth-largest US airline by market share, putting pressure on the nation’s biggest carriers and raising concerns about further consolidation in an already-concentrated industry. The airlines, which offer 1,000 daily flights serving destinations in the United States, the Caribbean and Latin America, said in a statement that the merger would save consumers $1 billion annually, and that the airlines would not lay off employees because of it. They also said they expected to hire 10,000 workers by 2026 to add to their current combined total of 15,000. The deal could face pushback from the Biden administration, which has increasingly challenged such mergers and partnerships in court. In the fall, the Justice Department sued to prevent a domestic alliance between American Airlines and JetBlue Airways, arguing that the agreement would drive up prices and reduce competition. The US airline industry has undergone a tremendous amount of consolidation over the past two decades, with the nation’s four largest airlines controlling about 80 percent of the domestic market. Spirit and Frontier argue that the merger would allow them to better challenge those large carriers. But a deal would also create a giant budget airline that could smother smaller companies, including two recent entrants, Breeze and Avelo. “We basically have a four-firm oligopoly,” said Diana Moss, the president of the American Antitrust Institute, a left-leaning think tank and competition-law advocacy group. “Having this fringe of smaller carriers breathing down their necks is really the only thing left that keeps the Big Four on their toes.” Barry Biffle, Frontier’s CE, said the airlines had reached out to the Biden administration about the merger and expected it would be well received. He argued that the deal would allow the airlines to offer more cheap fares and better service.<br/>

A bid by budget carriers Frontier Group Holdings and Spirit Airlines to create the fifth-largest US airline will face close scrutiny from the Justice Department, lawyers said Monday. The Biden administration has made injecting more competition into US industries a key priority. Andre Barlow, an antitrust lawyer at Doyle, Barlow & Mazard, said in the "antitrust environment" the airlines would have trouble getting the deal past the department's Antitrust Division. "Given the administration's stance against mergers, it will be difficult for these two low-budget competitors to convince the antitrust enforcers that its merger will lead to lower prices," he said. Frontier and Spirit pledged to avoid any job losses and add 10,000 direct jobs by 2026. They also promised the merger would deliver $1b in annual consumer savings. "DOJ will focus on whether the two airlines overlap with respect to city pairs and whether the combination of two budget airlines would result in higher prices for consumers," Barlow said. Kenneth Quinn, a partner at Clyde & Co, said however that the DoJ would have a "hard time blocking this merger." "You've got two ultra-low-cost carriers with a common fleet without a lot of competitive city pair overlap," he said. The Justice Department sued in September to unwind American Airlines and JetBlue Airways "Northeast Alliance" partnership, arguing it seeks to eliminate "significant competition between a dominant airline and a uniquely disruptive competitor." The Justice Department declined to comment on the merger proposal. A White House spokesperson did not comment on the Frontier Spirit merger proposal but said the Biden administration "is committed to protecting competition across a wide range of industries for the benefit of consumers." <br/>

Frontier Airlines on Monday temporarily halted all flights after a technology issue, according to the FAA and the airline. A Frontier spokeswoman said the airline was moving to ramp back up operations. The FAA said in a notice that it was issuing a ground stop for all Frontier flights nationwide "for automation issues" at the airline's request. Flight tracking website Flightradar24 tweeted at 11:08 a.m. ET (1608 GMT) that Frontier "currently has no airborne flights right now." Another aviation tracking website, FlightAware, said Frontier had canceled 20% of flights on Monday and delayed 23%. An airline spokeswoman said the "issue was identified and has been resolved. We are working to restore our flight schedule for the balance of the day." The airline did not immediately say when it planned to resume flights. <br/>

Allegiant Travel, the flight and leisure trip package seller, appointed its current president, John Redmond, as the company’s new CEO beginning June 1. Redmond, who has served as president for the past five years and been a board member for around 15, will replace current CEO Maurice Gallagher Jr. Gallagher, who is Allegiant’s largest shareholder after taking control of the airline in 2001, will transition from chairman to executive chairman. Allegiant’s announcement Monday about the changing of the guard at the CEO slot occurred coincidentally on the same day that Frontier announced it would merge with and take control of Spirit Airlines in a deal that values Spirit at $6.6b. That merger, if it secures regulatory approval this summer, could heighten competition among low-cost airlines. Frontier and Allegiant have well more than 100 overlapping routes, and Allegiant and Spirit fly the same routes minimally. Allegiant, though, is very much a hybrid airline and leisure travel package provider, bundling flights, hotels and car rentals so doesn’t compete with Frontier and Spirit in a significant way when it comes to trip packages. Allegiant is traditionally among the highest profiting US airlines, although in Q4 its net income fell 28% year over year to $10.7b. Executives cited the cost of compensating passengers for cancelled flights because of crew shortages and Covid disruptions as dragging down earnings. Story has more.<br/>

Sun Country Airlines says it continues to “grow sensibly through the recovery” as it posts a small loss for Q4 2021. The Minneapolis, Minnesota-based ultra-low cost carrier on 7 February says it lost $602,000 in the final three months of the year, compared to a loss of $8m in the same quarter in 2020. For the full year, Sun Country achieved a profit of $77.5m – including government financial aid – compared to a loss of $3.9m in 2020. Revenue for Q4 was $172.6m, up from $107.8m in the same quarter in 2020. For the full year 2021, the company reported $623m in revenue, up from $401.5m in 2020. “We closed out 2021 in a very strong way,” says CE Jude Bricker. “The company is in a tremendous position, and we are excited to see it outperform in 2022 and beyond.”<br/>

WestJet has cancelled 20% of its flights in March, extending schedule cuts from February amid ongoing uncertainty that continues to drain demand. Interim CEO Harry Taylor said travel advisories and testing requirements were meant to be temporary, but that after two years the industry crisis has come to a head. "It is disappointing that Canada remains stagnant in its approach and continues to make travel inaccessible and punitive for Canadians and inbound tourists," he said Monday. Echoing demands from Air Canada and Toronto's Pearson airport last month, WestJet called for randomized testing upon arrival only, rather than mandatory molecular testing before takeoff and after landing for fully vaccinated international passengers. The Calgary-based company also wants an end to quarantines for travellers awaiting results when they return from abroad. Canada remains the only G7 country to require pre-departure and on-arrival molecular testing, Taylor noted, adding Ottawa must outline a recovery path for the travel and tourism industry. Since early November, WestJet and budget subsidiary Swoop have cancelled 11,285 trips that they had planned for March, or 48%. Meanwhile, compared with its plan in mid-October, Air Canada has scrapped 16,617 or 41% of its scheduled March flights, according to flight data firm Cirium.<br/>

Icelandair Group has notified that it is exiting the government-guaranteed credit facility which has been in place to support the company since September 2020. It entered agreements with the Icelandic government, as well as the financial institutions Islandsbanki and Landsbanki, for a credit facility worth up to $120m. While it was intended to provide liquidity in case of prolonged problems, the facility – which had a two-year drawdown period and included a 90% government guarantee – has not been used. Icelandair Group says it has “successfully navigated” the air transport crisis and emerged with a “strong financial position” following a restructuring effort. “It is gratifying to announce our termination of the government-backed facility almost eight months ahead of schedule and without ever having had to draw on it,” says CE Bogi Nils Bogason. He says the group’s airline capacity has risen to 65% of pre-crisis level, and that Icelandair has an ambitious schedule planned for summer 2022. “Alongside the successful ramp-up of our operations, we strengthened our team and recruited almost 1,000 employees during the year,” adds Bogason.<br/>

Start-up Norse Atlantic Airways claims it received over 3,000 applications to fill 50 positions for pilots, ahead of the airline’s planned serve launch from Oslo. The carrier says pilot training has commenced and training for cabin crew will begin soon, and it is setting up a US cabin crew base in Fort Lauderdale – with other bases to follow as the airline’s expansion progresses. Norse Atlantic intends to open ticket sales for its transatlantic operation by the end of March, and start services in Q2. “Future customers and supporters on both sides of the Atlantic are reaching out to us every day asking about when they can start buying tickets, when we will be airborne and, not least, what routes we will be offering,” says CE Bjorn Tore Larsen. “We are working on finalising our route network and look forward to announcing our destinations when we open for sale.”<br/>

Danish pension fund AkademikerPension said on Monday it was selling its stake in budget airline Wizz Air over alleged "human and labour rights abuses" towards its workers. The $23b fund was one of 14 investors that called on Wizz in December to allow employees to form and join trade unions, saying their research suggested it was discouraging the practice in breach of staff rights. AkademikerPension said on Monday that, after meeting management, it saw no sign the airline's practices would change, and so it had begun to divest its holding, worth more than $3m. The market value of London-listed Wizz Air is around $5.8b. The fund said it had sold the shares it directly held in Wizz Air on Feb. 1, and had given its external fund managers until Feb. 8 to do the same. "After engaging with the company's management, we are in no way reassured that they will initiate the changes we have requested with regard to human and labour rights issues," said AkademikerPension CE Jens Munch Holst. Responding to the fund's criticism of labour rights at the airline, a spokesperson for Wizz Air said sustainability was a core value for the company, citing its top ranking among European airlines according to such criteria from data provider Sustainalytics. "Wizz Air takes the engagement with its employees very seriously and we are confident that our structures and processes that have been in place to support open and transparent engagement are working extremely well, including our People Council, which provides a forum for employees to discuss important issues," the airline said. As airlines continue to recover from the impact of the Covid pandemic, Wizz Air noted its plan to hire more than 1,000 staff in the coming months and said it had restored the pay of cabin crew and staff to pre-pandemic levels. The move by AkademikerPension followed an investigation in which it found multiple instances where the company had refused to recognise the rights of staff to form a trade union.<br/>

Berniq Airways has commenced international flight operations following its inaugural 2x weekly Benghazi-Tunis service on February 4. This will be followed by Brak-Tunis return flights on February 27. Operations are on-board the airline's fleet of two A320-200s which, until this development, were used to connect Benghazi with Misurata, Tripoli Mitiga, and Tobruk domestically. <br/>

Russian regional carrier Komiaviatrans is aiming for expansion after an injection of aid from the local government allowed it to avoid collapsing into bankruptcy. The Komi republic’s ministry of economic development states that the airline had recorded debts of Rb4.2b ($55m) in October last year. Government representatives approved a Rb1.8b financial assistance package which was credited to the company’s accounts in December. The ministry says this has been used to pay obligations to suppliers, as well as salary and tax arrears, slashing the debt to Rb1.1b by the beginning of January this year. It states that paying off the overdue debts will “prevent the company from going bankrupt”. “Elimination of bankruptcy risks allowed Komiaviatrans to move on to stabilising its financial condition,” it adds, enabling the airline to restore fleet capacity and increase production.<br/>