Summary
- Spirit Airlines CEO spoke his mind about the failed merger with JetBlue at an earnings call.
- He found the judgment a “serious misreading of both the evidence and the law.”
- Spirit has trimmed its summer schedule and deferred aircraft deliveries as it looks to save cash and return to profitability.
The last few months haven’t exactly gone how Spirit Airlines would have liked to, and that included the carrier’s failed merger with JetBlue. And now Spirit’s chief executive officer has spoken his mind about why he thought it was not the best decision and why some smaller non-legacy carriers are struggling in the US.
Looking back at the failed merger
At a recent earnings call, Spirit Airlines CEO Ted Christie looked back at the merger attempt with JetBlue and its eventual outcome. He noted how the airline initially favored a deal with Frontier Airlines, but a richer deal from JetBlue helped change that decision.
Christie said that Spirit was aware of the risk involved in the deal with JetBlue but that “we believed the merger with JetBlue would, as an alternative, be very positive for consumers and other constituents.”
Photo: Markus Mainka | Shutterstock
Of course, the risk did not pay off, and Spirit and JetBlue have gone their separate ways. Christie, however, spoke his mind about what the decision to block the Spirit-JetBlue merger meant not just for Spirit but other small non-legacy carriers in the country.
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Seems like a rigged game
Looking back at Spirit’s unsuccessful attempt to integrate business with JetBlue, Ted Christie said there was a “serious misreading of both the evidence and the law” during a federal judge’s ruling to block the deal on antitrust grounds.
He highlighted how it was a waste of taxpayer funds and damaging to two proud companies when the Department of Justice brought a case to block a merger between two carriers with less than 8% combined market share. The CEO said that this decision highlighted just how uninformed the government is about the dynamics of the airline business.
Photo: HMBSoFL Photography | Shutterstock
He also said that given the dominance of a handful of big airlines in the country, the Spirit-JetBlue merger would have been good for competition in general and that the odds are stacked against smaller airlines in the US. Christie said,
“Nearly all the profits of the US airline industry are concentrated in just two companies, while the smaller non-legacy carriers scramble to restore profitability in what seems evermore like a rigged game. The big four are the beneficiaries of this new normal; American consumers are the long-term losers.”
Looking ahead
While acknowledging that the airline was prepared to have the company’s new corporate campus in Dania Beach, Florida, branded with the colors of JetBlue, Christie also suggested that it was time to move on and that “now we are proud to boldly display our signature Spirit yellow.”
Still, plenty of issues need to be resolved as the airline struggles to maintain profitability after the pandemic. The airline has trimmed its summer schedule, removing over 300,000 seats in July and August, and also recently deferred aircraft deliveries and decided to furlough some pilots from September onwards. All this is being done to improve its liquidity in the next two years.
Photo: Don Mammoser | Shutterstock
Spirit, which has also been impacted significantly by the grounding of many of its A320 family of planes due to engine issues, is set to receive up to $200m in compensation as part of Pratt & Whitney’s ongoing legal settlements.
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