What are the current sentiments regarding the likelihood of the merger going through? Do people seem pretty confident it won't be shut down by the government?

 

Nobody knows for certain. General belief is that it will go through. Probably looking at a DOJ lawsuit to stop the merge with JetBlue winning in court.

 

Not terribly concerned. They’ve let everyone else merge that’s bigger, most recently AA and USAirways. Also Spirit is bleeding money and circling the drain. I think JB has a good case for the fact that if they don’t buy us we won’t exist.

 

Agreed, I wouldn’t be surprised to see some initial objections but eventually dropped with some very minor divestitures.

 

"Jetblue has never furloughed an employee"... interesting...

 

No company has ever furloughed an employee…right up until they do. JetBlue would absolutely do it if they needed to. If you need any proof of that, look no further than the covid LOAs, where they only offered brief furlough protection. Even in an LOA that provided essentially 10+ years of scope relief, they only offered brief short term furlough protection that wasn’t close to being as long in duration as the scope relief. If they had any intention to commit to no furloughs, they’d put it in writing. They haven’t, and they won’t.

 

I'm just now re-familiarizing myself with the industry after a 20-year hiatus, so no expert by any means. In their history (admittedly short relative to the Legacies, but well beyond a start-up at this point) they've never furloughed. It's just an interesting data point. I certainly didn't infer that fact to be primarily/solely the result of management's good will toward employees, but I assume it's an indication of a solid and stable business model that is well-managed. Perhaps a little too conservative? but stable. But this Spirit merger/acquisition might be a big change.... establishing a new baseline... ?

 

I think it has more to do with the age of the company. It’s always been a growth company that underpaid pilots and had a much lower cost structure than legacies did, and their growth has been managed slow and steady for the most part. The growth to a mature size company with no retirements will make it a lot harder for them to mitigate issues when/if there is a big downturn. Before, they could pump the brakes on hiring as they did in the 07-09 downturn. As pilots have made more and become larger cost units, and there are more of them, it’ll be tougher in the future. They threw out 1500/4000 for furlough numbers during covid as part of their attempt to pass covid relief LOAs. No one ended up getting furloughed or getting warn letters, but it was definitely discussed.

But yeah, spending 3.8bn plus 1-1.5bn on integration costs with rising interest rates and growing the combined pilot group to 9,000+ with only 100-200 retirements a year absolutely opens up the possibility if there’s a hiccup in the economy in the mid to late 2020s. I doubt it’ll happen, but it’s not impossible. And I don’t think their proud history of never furloughing will mean much when it comes down to a numbers thing. Same thing happened at southwest. They had never furloughed. And then they sent warn notices during covid. I doubt anyone is ever safe from furlough at any company. So when I hear management use that as a talking point about why someone should go somewhere, I always keep that in mind, and when guys tell me they feel safer at jetblue for a furlough than a legacy because JetBlues never furloughed, I just lay out the math. Retirements at legacies can help cushion the blow. JetBlue doesn’t really have that cushion. Their attrition is off the bottom, and if jetblue is furloughing because of a downturn, I doubt anyone else is hiring much either, so attrition would stop, and it’d be a tough spot for the company. But, who knows how things will turn out in 5-10 years from the merger. Hopefully it won’t ever come to that. Hopefully they can continue their no furlough history for at least a few more decades.

 

30 days or so until we have a more clear picture

https://stocks.apple.com/AD1VaRmCpTd2Rc3EFkYligQ

 

Don’t start holding your breath at 30 days. That seems just a tad bit optimistic.