BusBoi

I'll add this: One of my friends at jetBlue is also a former lawyer, and in his analysis the DOJ case is so weak that if they were a private law firm they would probably be sactioned.

Andy

I wanted to circle back to this. I think that the reason why the DOJ chose those witnesses is to prove that the ULCC model is still viable. IMO, Biffle spoke with more optimism about the ULCC model than is warranted. Like it or not, all of the full service airlines are killing the ULCC model with their Basic Economy tickets ... as is JBLU with Blue Basic.

The DOJ has defined the Clayton Act in such a narrow scope that if the DOJ won, mergers would become nonexistant. Why?
They're going with any passenger having to pay more for a ticket as the bar. JBLU is arguing that the merger will lower the price for almost everyone.

(random thought) One thing I did find humorous about Judge Young yesterday was that he chided a couple of witnesses who stated, 'I guess'. He said, no, you're 'estimating'. Then something along the lines of guessing not acceptable.
He also did the same to the DOJ lawyer several times (and the JBLU lawyer once or twice) when their verbiage was too vague.

Noisecanceller

Biffle wins with that testimony regardless of whether or not it’s factual.

He says he can slide into profitable markets and merger gets approved. Also can state the market is saturated and merger gets approved and he gets to capture market share left by spirit.

Out of the other side of his mouth he can state how great the model is and the merger doesn’t get approved and he gets to come back potentially for another deal on spirit at what will most likely be a much cheaper price.

Either way he wins.

Andy

Biffle was accompanied by an entourage of 4 - at least two and probably all four are lawyers.

Flyby1206

Would you say the DOJ case is also about treating the ULCC business model as a protected class of sorts? If JB was merging with AS would there be the same level of fight even though there are some overlapping routes and capacity would be reduced?

The govt picking a particular business model in an industry over another is also a dangerous road to go down.

As weak as the case may be, I suspect the DOJ wants to take this fight in hopes of setting a precedence they can apply to big tech or other industries. DOJ vs Google is a much harder battle than DOJ vs lil ole JB.

Aero1900

Andy!

Man, you are everywhere. I could hardly believe that you attended the trial. I always thought of you as the smug United guy that occasionally dropped by the Frontier sub section to let us ULCC guys know that we work for a failing business.

I now see that you own a bunch of Spirit (or was it Jetblue??) stock. I do too. I bought a ton during Covid when it was about 9 bucks. I have had a hard time watching the stock but I'm still holding on!

Btw if you are looking for some other cheap ULCC stocks, may i recommend ULCC

Andy

I'm in SAVE for the arb play. The markets are SERIOUSLY discounting the likelihood that the DOJ will lose and this merger will go through. And Robin's eager enough to get this deal done that he'll pay $33.50/sh.

As far as being smug, I guess I developed that from the years I was furloughed and LCC guys were openly dividing up UAL's gates/slots/planes. Think of it as a dish served cold.
I don't view ULCCs as a failing business model; just one that has reached saturation and there's not enough additional demand for that fare to support any/much growth. And then there are the legacies that are/will continue to poach freshly trained LCC pilots. I see it as a business model with little/no growth prospects.


Note from stocktwits ... this guy is a solid source of info:

Riceter
2m

$JBLU $SAVE more buys are going to come in this afternoon. Very similar day in court today as yesterday with much larger turnout. It's not a matter of winning at this point but more so gaging if the DOJ is going to settle early.... before you ask no I wasn't personally there today and I'm getting my information secondhand from someone who was. Bullish

Aero1900

Appreciate it!

If I can cash in on $33/ share I'll be happy. I will have ended up holding the stock a lot longer than I expected but that's ok.

As for the smugness, I just take pleasure in giving you a hard time. You know that. We've had our fun arguments before.

Andy

The DOJ case is a very 'novel' (that's the word I've seen used in other writings) of section 7 of the Clayton Act:
[n]o corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.

The DOJ is interpreting this to mean that if any customer has to pay a higher ticket price as a result of the merger, then the above secion applies. The problem is the word 'substantially'. Given the Judge's penschant for exact definitions of words (as i cited in examples above), there is no way that he will find that the merger will substantially less competition.

From what I've read, the DOJ's on a mission to oppose all mergers, no matter how much sense they make. They have been more active than ever. In fact, the DOJ didn't win any points with the Judge by refusing to discuss any remedies with B6 (ie divestitures).
The DOJ can make any statement they want after they lose this, but I don't think even the most lefty of Judges would rule in favor of the DOJ since it's so over the top.

Andy

Absolutely.

Yeah, you'll get the $33.50 on this one shortly after the Judge rules in favor of the merger.