unaligned

Spirit Airlines has delayed a shareholder vote on its proposed merger with Frontier Airlines amid an escalating bidding war, with JetBlue Airways trying to muscle in on the deal. The vote, originally scheduled for Friday, was pushed to June 30. In a statement on Wednesday, Spirit said the extra time would allow its board “to continue discussions with Spirit stockholders, Frontier and JetBlue Airways,” which has offered a rival bid for the airline. Early last week, a prominent shareholder advisory firm, Institutional Shareholder Services, issued a report recommending that Spirit shareholders reject the Frontier deal “as a signal to the board” to negotiate with JetBlue, which Spirit’s directors have repeatedly spurned. ISS said it was reasonable to assume that the Frontier deal would have an easier time winning regulators’ approval, but disagreed with Spirit’s assertion that a merger with JetBlue had virtually no chance because of antitrust issues. Frontier responded by addressing one of ISS’s concerns, promising to pay Spirit a $250m breakup fee if regulators prevent an agreed merger. JetBlue had initially offered a $200m payment under the same circumstances. Then another influential shareholder advisory firm, Glass Lewis, weighed in, recommending that Spirit shareholders approve the Frontier deal. This week, JetBlue improved its offer, raising its breakup fee to $350m and offering to pay a portion upfront to shareholders should they approve its offer. JetBlue’s CE, Robin Hayes, said that the postponement of the vote was “a necessary first step toward genuine negotiation.” He added, “Spirit shareholders are clearly urging the Spirit board to engage with us constructively.” Industry analysts generally agree that Spirit’s proposed merger with Frontier, which was jointly announced in February, would make for a simpler combination. Both airlines operate similar low-cost business models, but with different geographic strengths. Acquiring Spirit also makes sense for JetBlue, which has struggled to grow as much as it would like, though combining the two airlines would have its challenges.<br/>

Transatlantic start-up Norse Atlantic Airways is opening services from the German capital Berlin, operating initially to two US gateways. Norse Atlantic will serve New York JFK daily from 17 August. It will expand the fledgling German network with a service to Los Angeles from 19 August, operating three-times weekly. Norse Atlantic will use Boeing 787s on the routes. The carrier’s chief executive, Bjorn Tore Larsen, says Berlin has, for “far too long”, been undermined by “poor direct transatlantic connectivity”. “These two new routes will provide a direct and cost-effective option, saving both money and time, for local and international businesses,” he adds.<br/>

Wizz Air, the European low-cost airline, has forecast more losses at the start of the summer season as disruption at airports and slowing economic growth hamper the industry’s recovery from the pandemic. CE József Váradi said the carrier was suffering from staff shortages across the industry, including in air traffic control and ground handling, which he said had failed to prepare for the rapid return of passengers. “It is disturbing to say the least that the industry and supply chain has not been able to ramp up capacity appropriately,” he said. Airlines, airports and ground handlers across many parts of Europe have struggled to hire enough staff this year after cutting tens of thousands during the pandemic. The airline has recruited more than 2,200 people over the past year and expects to have 6,700 staff by the end of the summer, up from about 4,000 people before the pandemic. “We are deploying extra resources to minimise disruptions and urge all other stakeholders to do the same,” Váradi said. The London-listed airline said it expected demand for travel this summer to be “excellent”, and that during the peak months between July and September it would fly 40% more than in 2019. But it expected to lose money in the current quarter, between April and June, and did not provide financial guidance for the rest of the year. “The airline industry remains exposed to externalities such as air traffic control disruption and continuing operational issues within the airports sector, adding to a volatile macro environment,” said Váradi. He expects the business to turn profitable between July and September, its financial second quarter, but how much money it makes will depend on fuel prices and airport disruption. “Summer is going to be profitable, but we will [have to wait and] see how profitable it will be,” he said.<br/>

The Spanish government has approved a E200m rescue loan to privately owned Spanish airline Volotea to help it recover from the pandemic crisis, the Prime Minister’s office said. Company shareholders will add E10m in cash to buoy the airline, which operates within Spain and to and from several other European cities. “It will allow solid growth of the company in the long run,” Volotea said. Since the beginning of the pandemic in 2020, which has ravaged the airlines industry, the Spanish government has provided financial support to two other privately held airlines with operations in Spain, Plus Ultra and the larger Air Europa, which is in the process of being taken over by IAG.<br/>

Virgin Atlantic Airways CEO Shai Weiss labeled his counterpart at London Heathrow airport “lord doom” over his suggestion that a recovery in UK travel may take until the end of next year. Heathrow CEO John Holland-Kaye’s prediction that it will be 12 to 18 months before the aviation industry fully recovers capacity is “just ridiculous” and amounts to a “cynical” attempt to justify a hike in the hub’s fees, Weiss said Wednesday. Virgin Atlantic’s passenger capacity will be at 102% of 2019 levels by the fourth quarter, with full-year revenue likely to reach 90% of the pre-pandemic total, Weiss said. While inflationary pressures and higher household bills may be a factor in limiting growth, he said the carrier still expects to post a profit next year, in line with previous forecasts. “Who talks down their own book?” Weiss said of Holland-Kaye’s comments at a Financial Times conference Tuesday, where he reiterated an earlier prediction that a summer boom may not be sustained. “There will be families and business people looking at this and asking if they really need to travel. I was so surprised to read the headlines. It’s nothing that we’ve ever talked about with them.” The hub is lobbying the aviation regulator to allow it to raise fees to around GBP42 per passenger—more than an earlier Civil Aviation Authority proposal—while airlines want to limit increases.<br/>

Ryanair has halted talks with two Spanish unions over a salary hike, the unions said, amid threats the low-cost airline's cabin crew could go on strike in several European countries during the summer season. Europe's biggest budget airline walked away from the talks on Tuesday arguing the strike threat by European unions showed a lack of commitment to dialogue, Spanish unions USO and STCPLA said in a joint statement. They accused Ryanair of acting in bad faith and said they sought to return to the negotiating table. Seven unions from Italy, France, Portugal, Belgium and Spain issued a statement in May warning that Ryanair's cabin crew in those countries could launch a strike this summer if the airline did not offer a "meaningful response" to their demands for better working conditions. The threat comes as the airline sector hopes to recover this summer from the impact of the pandemic. Ryanair's Group CE Michael O'Leary said in May bookings looked very strong for the summer and the load factor should gradually rise to 94-95% in June-August, practically reaching pre-COVID-19 pandemic levels. Portugal's union of civil aviation staff SNPVAC said in May after meeting other unions in Brussels that Ryanair acted as if "European and national legislation can be negotiated". It complained that crew members work without access to drinking water on board and have no local support from human resources.<br/>

Ryanair called on Hungarian Prime Minister Viktor Orban's government on Wednesday to scrap what it called a "misguided" new tax levied on departing passengers as part of efforts to rein in a rise in the budget deficit. Orban's government announced new windfall taxes worth 800b forints ($2.19b) on "extra profits" earned by banks, energy companies and other firms last month, hitting Budapest stocks and rattling investors. The measures are needed to finance Orban's costly policy of keeping a lid on household utility bills at a time of surging global energy prices as well as tax rebates and other measures, which helped Orban get re-elected in an April landslide. The new levy on the airline industry involves a tax worth E10 to 25 on passengers departing Hungary from July. "This unjustified tax on the airline sector (which has been heavily loss-making for the last two years) will be damaging for Hungarian tourism and the economy, which is dependent on air carriers to provide connectivity, tourism and jobs," Ryanair said. "This ill-timed and ill-advised 'extra profits' tax which inexplicably compares the loss-making aviation industry with hugely profitable oil and energy companies, has instantly made Hungary uncompetitive and less attractive to airlines and tourists." A Hungarian government spokesman did not immediately respond to emailed questions for comment. Ryanair said in response to the new tax it would be forced to move growth capacity to countries that are working to restore traffic.<br/>