AS JIMMY V SAID: LAUGH EVERYDAY
I am this morning sitting in Cambridge, MA watching it snow. I just finished reading #ChristineBoynton's coverage of the #jetbluespiritmerger trial in today's #AviationDaily.
One of a few hypotheticals Judge Young posed to counsel for the DOJ was: "Suppose as I work through this, and think what I have before me is insufficient and warrants some restraint, but with some more divestitures it might work ... Should I go down that route?”
Boynton: DOJ pointed to the “the extent of harm” for which it has built a case in court since proceedings began on Oct. 31—concerns centering on what it describes as a loss of Spirit’s ULCC business model and a detriment to consumers it values at $1 billion annually, with anticompetitive effects it sees on more than 150 routes.
Then the LOL/LMAO part: DOJ attorney Edward Duffy to Judge Young: “It is difficult for me to imagine substantively, what kind of remedies could offset this ... There does not seem to be any remedy, short of a full stop injunction.” Huh? The loss of Spirit's business model that will produce pre-tax losses for the fourth year in a row when 2023's books are closed.
Operating models that produce those kinds of financial results probably need major surgery. In today's environment, you cannot restructure labor and fuel. Oh yeah, it is expensive to park new airplanes too because there are not sufficient parts. As costs go up so must ticket prices - and revenues simply have not exceeded vaunted low costs for some time.
Networks are like brick walls in my simple mind. Easy to add to - but tricky to subtract from. You can pull a brick here and a brick there and the wall's structural integrity remains intact. But pull that one brick - or give up gates in this airport or that - and the network's structure begins to come undone.
It is not like this combination was ever going to scare the hell out of anybody - particularly the Big 3 or 4. Like Spirit, jetBlue is also a Loss-Making Airline (LMA v2) to steal and re-purpose Jamie Baker's LMA acronym. In order to be a meaningful competitor, strongholds are necessary in any network to leverage.
This NK/B6 combination HAS PRESENCE EVERYWHERE AND DOMINANCE NOWHERE. It has been inferred that 1 + 1 < 2.
So, they put forth some concessions they think might appease those concerned about the combination's perceived anti-competitive effects. And now more? At what point are the leverage points so marginalized that none of it makes sense?
Boynton then gets to the after-intermission part of the comedy show: DOJ arguing that JetBlue statements on slow and difficult organic growth were directly at odds with its assertions that Frontier and other ULCCs could grow at “astronomical” rates.
Earlier I posted and asked where in the hell are these thousands of route opportunities? That's right, many have already been tried and disbanded because they are not profitable.
DOJ should reflect on just what the laugh test is.
#swelbar
Head of Auto at Truist & CEO of Regional Acceptance Corporation
2moYou all are awesome and those are some pretty good times.