unaligned

JetBlue Airways Wednesday mounted a vigorous defense of its unsolicited $3.6b bid to acquire ultra-low-cost carrier Spirit Airlines, saying the company is "highly confident" of securing regulatory approval for the deal. The New York-based carrier on Tuesday surprised Wall Street with a $33 per share cash offer, potentially derailing a $2.7bi merger plan between Spirit and Frontier Group Holdings. Frontier on Wednesday said it remained committed to its merger with Spirit as that would create the country's "most competitive" airline and offer more ultra-low fares to consumers. JetBlue's proposed deal is widely expected to attract close antitrust scrutiny from President Joe Biden's administration, which has taken a tough stance against mergers that may reduce competition and increase prices for consumers. The carrier said while it expects a lengthy regulatory process, it is counting on its track record of lowering fares and increasing competition to get the nod. "We are convinced... that average fares come down more when JetBlue flies into a legacy market than when an ultra-low-cost carrier does," JetBlue CE Robin Hayes told investors on a call. Some analysts, however, are not sure the administration will buy the argument that the acquisition would translate into lower consumer costs as JetBlue's fares are higher than Spirit's. JetBlue also has plans to remove some seats on Spirit's planes. White House National Economic Council Director Brian Deese on Wednesday declined to comment on JetBlue's bid, but said the Biden administration takes "very seriously" the impact of industry consolidation. JetBlue and American Airlines Group are already facing a lawsuit from the US Department of Justice over their Northeastern Alliance.<br/>

Spirit Airlines has what one analyst calls a “stealth” asset, the opportunity for JetBlue Airways to grab scarce aircraft if its $3.6b offer goes through. A lack of future production slots for Airbus jets could limit growth at a stand-alone JetBlue, Chief Executive Officer Robin Hayes said Wednesday, a day after his carrier’s bid was announced. JetBlue’s offer is based on growing large enough to be an effective competitor to the four biggest U.S. carriers, which control about 80% of the domestic market. Combining existing JetBlue and Spirit orders is critical for that growth, Hayes said. “The supply of airplanes is very challenging for the next few years,” he said on a conference call with analysts. “This sets us up with a compelling order book.” Airbus already makes up most of both carriers’ fleets. Airbus customers face a wait of two to three years for A320 delivery slots. The backlog stood at 5,765 of the narrow-body jet at the end of December, including 3,323 for the popular A321neo. Spirit has orders for 120 of the A320 to be delivered through 2027, according to regulatory filings. That makes Spirit’s order book “a stealth undervalued asset,” JPMorgan Chase analyst Jamie Baker said in a note to clients. The shortage of Airbus and Boeing jets is a widespread problem, as Air Lease CEO John Plueger pointed out at an industry conference last month. “If carriers are looking for lift in ’23 and ’24, there’s not a lot left.” JetBlue has orders for 64 A321s, plus 62 of Airbus’s smaller A220 aircraft. A combined airline would have 455 planes and 312 Airbus jets to be delivered over the next six years, JetBlue said, “mitigating the persistent challenge” of limited production.<br/>

A top White House economic adviser on Wednesday said the administration takes “very seriously” the impact of industry consolidation but declined to comment on JetBlue Airways’ proposal announced on Tuesday to acquire Spirit Airlines. “The concerns about economic benefit and consumer welfare from consolidation are ones that we take very seriously and that you should expect to see our antitrust enforcement agencies to take very seriously,” White House National Economic Council director Brian Deese said.<br/>

LATAM Airlines Group plans for 5% of its fuel to be sustainable aviation fuel (SAF) by the end of this decade. The Santiago-based company is the first airline in Latin America to make such a commitment. “We are going to seek to consume five percent of our [fuel] consumption in sustainable aviation fuels by 2030, and we are going to privilege production of sustainable aviation fuels from Latin America,” Roberto Alvo, the company’s CE says. “Today there is no SAF production in the region, and we are announcing this as a first very important step of generating the incentives so that production can start in the region,” he adds. LATAM sees itself as a conduit to supporting increased use of SAF in Latin America, Alvo adds. “We want to start an open conversation between governments and producers and companies to generate the set of public policies that will allow the production of sustainable aviation fuels in South America,” he says. “South America has great advantages for this. We have all we need in order to be one of the most efficient producers in the world.”<br/>

Jet Airways India , which is undergoing a court-monitored restructuring, plans to return with a hybrid of premium and no-frills services that would allow the former top local airline to claw back market share while managing costs in the fiercely competitive Indian aviation market. The bankrupt airline, now helmed by a new set of owners, will have a two-class configuration where business class passengers will be offered services including free meals, its new CEO Sanjiv Kapoor said in an interview near New Delhi on Wednesday. The economy class will, however, be modeled similar to low-cost carriers where flyers pay for meals and other services, he said. “It’s very difficult in the domestic Indian market to take on the cost of the food and everything else in economy class, where the customer in India chooses primarily on the basis of fares,” said Kapoor, an aviation veteran who took charge of the defunct airline this week. “Let’s just accept that and let’s not burden ourselves with extra cost.” A successful revival of Jet Airways, which collapsed under a pile of debt in 2019 and became the first airline to enter a reformed insolvency resolution process, will be a landmark moment for India’s bankruptcy laws. The new owners -- Dubai-based, Indian-origin businessman Murari Lal Jalan and Florian Fritsch, the chairman of London-based financial advisory and alternative asset manager Kalrock Capital Management Ltd. -- have pledged to make investments of as much as $120m, Kapoor said. Kapoor himself is not new to navigating carriers through turbulent skies. He spearheaded SpiceJet as its COO in 2014, helming it through a time when the low-cost carrier was severely cash strapped.<br/>