Nixed JetBlue-Spirit deal might impact Alaska-Hawaiian transaction

The blocked acquisition of Spirit Airlines by JetBlue Airways could have some bearing on another potential blockbuster deal in the US market: Alaska Airlines’ bid for Hawaiian Airlines. Following the 16 January shock judicial decision denying New York-based JetBlue its wish to acquire ultra-low-cost carrier (ULCC) Spirit, that airline’s shares fell as much as 60% before recovering to $7.92, or 47% lower, by the close of trading. But while the US government has been cracking down on airline consolidation, not all acquisitions are built the same, analysts say. “We still believe there are important differences that drive a higher probability for the Alaska-Hawaiian merger to prevail,” says Savanthi Syth, aviation analyst at Raymond James. “Importantly, the proposal does not suggest the removal of seats and it doesn’t eliminate a price-disrupter model,” says Syth, adding that Alaska and Hawaiian are “hybrid” carriers with business models mixing features of low-cost and full-cost carriers. By comparison, JetBlue is a low-cost airline and Spirit is an ultra-low-cost player. JetBlue had planned, following the acquisition, to remove seats on Spirit’s aircraft to make those jets more like JetBlue’s. Syth says Alaska and Hawaiian have little network overlap. But, she adds, “There could be concentration concerns in the Hawaii-continental US market. Of note, the failing company doctrine had little sway on Judge Young in his review of the JetBlue-Spirit case.” Last week, TD Cowen’s Helane Becker wrote that, “if the DOJ keeps an open mind, [the Alaska-Hawaiian] merger should be approved”. Alaska Airlines, meantime, says the JetBlue-Spirit decision “does not impact our plans to combine with Hawaiian Airlines”.<br/>