https://www.barrons.com/articles/air...lue-1525356236
Airline M&A: A Bidding War for Alaska, JetBlue?
Teresa RivasMay 3, 2018 10:03 a.m. ET
Stifel's Joseph DeNardi, for one: He argues that if Sprint and T-Mobile do manage to get clearance from regulators, we could see a deal happen in the airline space.
He writes that the wireless carriers' proposal is the first major test of this administration's view on consolidation. Clarity on that point may be helpful in any number of industries, but it's especially welcome in airlines, a sector that wants to consolidate further but hasn't, given the view that any deal would have a hard time getting past the Justice Department.
However, if the Big Four airlines—American Airlines Group (AAL), Delta Air Lines (DAL), Southwest Airlines (LUV), and United Continental Holdings (UAL)—thought they could get approval from the government to buy smaller airlines, he thinks that a bidding war may erupt for JetBlue (JBLU) and Alaska Air Group (ALK). The competition could make "the Alaska, JetBlue duel for Virgin America look like a used car auction," says DeNardi. Moreover, there isn't any takeover premium in either JetBlue or Alaska's share price at the moment.
Of course, there are plenty of moving parts and no deals (that we know of) are in the works at the moment. DeNardi writes that the current industry consensus is that Alaska "will serve as buyer and consolidator within its segment of the market—which would include itself, JetBlue, and Hawaiian Holdings (HA), while Spirit Airlines (SAVE) will consolidate the ultra-low-cost carrier space over time (3-5 years)."
Eventually, the industry would shake out to include the Big Four, along with Alaska in some form, which may include JetBlue and Hawaiian, and Spirit, again in a form that may include Frontier Group and Allegiant Travel (ALGT). Yet that consensus could shift rapidly if the Big Four believe that they could become buyers, and Alaska may find itself a target.
There's also the chance of interest from outside the industry as well, as Warren Buffett may be on the hunt to buy an airline.
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