DrSmacFum

True, more so a naive wish for that XLR -->330 rumor being on the table.

Mikeer50

Love or hate the Spirit merger, but thinking JetBlue should have bought HA instead is NUTS! For what, their wide bodies? If JetBlue wanted used A330 they could buy them tomorrow.

MaCrOs

For West Coast, Hawaii and Asia markets, definitely order book NBs and WBs. B6 could order WBs tomorrow but wouldn't receive any for another 5-10 years due to the back log. You could maybe find couple of used WBs but in today's market it's tough.

DontCallMeCindy

You’re focusing solely on acquisition costs. Acquiring an airline is only the first step—integrating product, network, technology, and personnel are all larger and longer-term structural costs.

JB’s fortay has always been offering a slightly better product, at a slightly lower price point than the network carriers. It only works on certain routes. We’re basically a boutique product—not a “hit all the points on the map” one.

Hawaiian is very similar—it’s a boutique product that connects a few select points on the map, that have a loyal customer base willing to pay a few bucks extra (but not too much extra) for an economy plus or premium product. Spirit is the polar opposite of that in every way.

Buying Spirit also carries with it a massive amount more risk than an HA acquisition would have, because it represents a fundamental change in our business model. We’ve essentially gone all-in on the idea that we will be able to compete head-on with the big 4…that’s a very big gamble versus just slowly bolting Hawaiian’s much-loved product/routemap onto JBs Northeast/Europe/Caribbean/South America network.

A Hawaiian acquisition might not make sense from a simplistic perspective of “what am I paying for right now”, but from a long-term NPV analysis of the overall CASM/RASM impact of ALL integration and acquisition costs, I guarantee you HA would’ve paid for itself much faster (aka much more cheaply, in NPV terms).

Bolting Hawaiian and JB’s networks, biz models, and product mix together could’ve been done at minimal cost, immediately after SOC. Working their 78s into routings like HNL-JFK-LHR could’ve been done overnight. The combined product would start generating premium revenue overnight.

Blending NKS and B6 together will be a costly nightmare that I can only hope doesn’t put us in Ch 11. It will take years and billions of dollars to piece it all together such that it runs properly. Time is money, especially when the money has been borrowed.

The US is bifurcating on income—there is no middle class anymore. I’d be much more confident betting my career on a boutique set of upper middle class, long-haul lie-flat markets, than a smorgasboard of low-yield ULCC markets. I haven’t run any numbers, but my guy instinct is the risk-reward profile of buying Hawaiian would’ve been a much more favorable utilization of capital. But trust me I hope to be proven wrong.

RiddleEagle18

The Hawaiian route map is absolutely incompatible with a standalone JB. Having a Hawaiian and pacific route structure makes zero sense with a stand alone jetblue route structure. There is no Midwest or west coast presence to feed Hawaii and there is no westcoast base you would gain with Hawaiian. There was also no orders at either company capable of building a national network to feed it.

The merger should have always been AK/JB and THEN HA, but neither management team could get their egos out of the way to decide who would run it.


I would much rather be in jetblues position with a combined NK fully serving 80% of the us population, trying to expand into the remaining 20%, rather than being a combined ak/ha and still not meaningfully serving the east coast, with limited narrow bodies orders trying to expand east.

DontCallMeCindy

You’re missing my point, so I’ll say it a different way: the economy is in the middle of a sea-change (which COVID accelerated)…available consumer discretionary spending is becoming more and more concentrated into a smaller and smaller basket of people, who live in a smaller and smaller basket of geographic regions.

You’re arguing “if we build it they will come”, by advocating for us to simply hit the largest percentage of US consumers possible, without considering the fact that the dollars we are seeking are very much concentrated into small sub-demographics/regions within that 80%.

In the 1970s/1980s, when consumer discretionary spending was more broadly distributed across the country and populace, I would’ve maybe agreed with your approach. But sorry buddy that’s not the world we live in anymore.

The ULCC phenomenon was simply a fluke period that happened because of historically loose credit conditions, which allowed low income consumers to finance air travel and discretionary travel. That loose credit cycle has ended though, and the ULCC model is predictably winding down. Given the time-lag of rate hikes to propagate into actual credit lines, wages, and employment, ULCC demand will likely continue weakening. I highly doubt any ULCC in existence today will grow significantly in the next 3-5 years. If anything they will shrink.

In aggregate, given my above thesis, the risk-reward matrix of spending 3.8 bil+ to offer seats to 80% of the US population, vs. the risk-reward matrix of buying Hawaiian for 1.8 bil, to surgically offer premium capacity between high-yield, geographically constrained markets…I haven’t run the simulation but you see my point.

You’re advocating for JB to buy 300 fishing boats to cover 80% of the ocean, which is already being fished by 4 much larger fishing fleets. I’m saying we already know where the biggest best fish are schooling and migrating, in places where both Hawaiian and JB have superior local knowledge and infrastructure. Why bet the company on covering the whole ocean, when you can just buy 50 really big boats and sit on a smaller set of much more certain outcomes?

DontCallMeCindy

Hawaiian seems to do perfectly fine filling up widebodies without any domestic CONUS support feed. I’m not familiar with how much codeshare traffic they have, but that argument doesn’t seem very logical.

You’re basically arguing for us to become a network carrier and cover the map, but with the exceedingly rare edge case of SWA, no one has pulled that off in history without some nasty bankruptcies along the way. Such a feat is actually probably way less feasible now, since there are, well, 4 massive legacies to compete with even if you can get to that scale wo being slayed.

Would you advise the board of Neimann Marcus to buy Dollar General? So they can “cover the map” more effectively?

Chimpy

(bifurcating) for those wondering “dividing in two.”

Cindy, you are now merging with us hillbilly Folk at NK, lets use third grade vocabulary so we can follow along.

DontCallMeCindy

Plenty of hillbillies here too—except we call them “Southies” here in Boston and the accent is slightly different

CX500T

Southies ain't even close to Hillbilly. Come down to Carver or Rochester. I'll introduce you to some Swamp Yankees.