Dick head

1) Biden DOJ shouldn’t have argued to block the JetBlue & Spirit merger 2) but - the merger would not have saved them, it actually probably would have pushed JetBlue to chapter 11 by now 3) the Iran War fuel price spike only sped up the inevitable by a few months 4) no external factors would have saved a fundamentally broken business model, ULCC’s probably won’t ever work in the US Expanding: Antitrust law is supposed to protect consumers, not preserve the number of logos. Spirit was already losing lots of money and the Big 4 control 80% of domestic capacity. Blocking a #6 buying a #7 to better compete with them got the analysis backwards. Biden’s DOJ brought the antitrust suit against the merger. It was flimsy but what was actually worse than their suit was the judges response. Judge Young (actually a Reagan appointee)’s argument in favor of the DOJ blocking the merger argued that Spirit’s “ultra low cost” model was a unique consumer good that had to be preserved. But it wouldn’t have been preserved if the airline was to stay in business- they had lost money each of the previous 5 years in business, and of course lost even more money after the merger was blocked. That being said, the merger would likely have strengthened competition in the short term and potentially given the combined airline more of a chance to compete against the majors. But the merger wouldn’t have saved JetBlue for other reasons. JetBlue probably would have been pushed into Chapter 11 by now. JetBlue would have taken on Spirit’s debt, Spirit’s fleet, Spirit’s leases, and Spirit’s labor costs, then tried to retrofit ULCC planes into a premium product during a period of soaring costs. JetBlue would have taken on a lot of debt. They currently have $8.5B of debt on a a $1.9B market cap. Add Spirit’s balance sheet to that and JetBlue is probably in bankruptcy court today tbh. The deal would have been a slow-motion acquisition of a second sinking ship by the first. Seems easy to blame the Iran war but remember that Spirit was already 2x in bankruptcy before the war. The war might, however push JetBlue into bankruptcy… but that structural problems were there before the war. No external factor would have saved a fundamentally broken business mode! Pick your counterfactual. If the DOJ didn’t challenge it and the merger closed? JetBlue dies faster carrying Spirit’s debt. No GTF engine groundings? Costs still don’t work. No Iran war and fuel stays at $2.50? Spirit still goes bankrupt twice (it already did), JetBlue still bleeds. A bigger COVID stimulus? They burned through what they got. Lower interest rates? Doesn’t fix unit economics, just delays the reckoning. The ULCC model assumed cheap fuel, cheap labor, cheap capital, and uninterrupted aircraft utilization. the ULCC model can’t work in the US. Ryanair and Wizz Air work in Europe because they get cheap secondary airports, weaker unions, shorter average stage lengths / higher density and customers conditioned to expect nothing. None of those conditions exist here. US airports are expensive and slot-constrained. US labor is unionized and post-2022 pay scales reset permanently higher. US consumers will pay $40 more to avoid the Spirit experience… And US legacies have learned to match ULCC fares on the routes that matter via basic economy, and make more money on premium cabins and credit cards. Spirit, Frontier, and Allegiant haven’t figured out how to consistently make money, they are low price but not low cost enough. So we are not going to see $69 fares anytime soon :(

The most prolific year of crime reduction in American history under @realDonaldTrump’s FBI 🇺🇸