Southwest Airlines flew straight into treacherous territory. Under Bob Jordan’s tenure as chief executive since early 2022, the U.S. carrier’s persistently gloomy financial outlook has been at odds with a broader industry resurgence, leaving its stock to languish. His slow response makes him and the company easy targets for an agitator like newly checked-in dissident Elliott Investment Management. Resetting the course, however, is harder than the hedge fund manager suggests. A travel rebound following the pandemic sparked a surge in Americans traveling internationally, little help to domestic-focused Southwest. Government-imposed production caps on Boeing, whose 737 planes the company uses, also

Rabble-rousing investor Carl Icahn has picked his moment well. Late Monday, he disclosed a 10% stake in carrier JetBlue Airways, which is reeling from a blocked $4 billion tie-up with Spirit Airlines. The airline has too many ails for an activist’s fix. But as Icahn’s previous campaigns show, investors might be willing to give him a chance anyway. The biggest issue looming over JetBlue is its failed bid to purchase Spirit. The company spent much of 2022 fighting rival bidder Frontier, acquiescing to a chunky $470 million payout if the merger didn’t close. The deal slammed to a halt after the courts upheld a

Reinforcements are arriving in the trustbusting fight. The U.S. Department of Justice on Tuesday sued to block JetBlue Airways’ $3.8 billion acquisition of Spirit Airlines, and it may yet be joined by colleagues at the Department of Transportation. It would be the third curious regulatory intervention in recent weeks, each encouraged by Democratic Senator Elizabeth Warren. The cases speak to how President Joe Biden’s administration is pushing its consolidation crackdown to new extremes. DOT merger approval is typically a formality. Since the industry was deregulated in the late 1970s, the agency rarely, if ever, has declined to approve the transfer of certificates to operate

It took a nearly four-month bidding war, but U.S. carrier JetBlue Airways has sealed a $3.8 billion deal with ultra-budget peer Spirit Airlines. Now, it must convince merger-wary regulators that the tie-up isn’t bad for competition. If it fails – and it might – the cost for JetBlue is dear. JetBlue boss Robin Hayes saw off a rival bid from low-cost Frontier by offering two things: cash, and security. The company’s all-cash offer beat a mostly-stock bid from Frontier that looked worse by the day as the equity markets weakened. And it agreed to shoulder an increasing share of the risk that the Department of Justice

As Americans flock to airports for a holiday travel bonanza, Europeans are bracing for a winter of government clampdowns. The U.S. airlines ought to be in a better position, but Covid-19 disruptions are likely to bring new storms on both sides of the Atlantic. The 2.2 million travelers who passed through U.S. airport checkpoints on Nov. 19 made it the single busiest air travel day since the start of Covid-19, according to the Transportation Security Administration. The agency expects around 20 million people to travel during the Thanksgiving holiday season, a slight decline from record 2019 levels. But Delta Air Lines expects

Refinitiv has seen big spikes in Eikon Usage data for airline, hotel and entertainment stocks as vaccination rates continue to rise (See exhibit 1).  Both the number of Eikon users and stock hits for these stocks have been on the rise and are considerably higher compared to pre-pandemic levels. The strong and positive correlation between the data sets is significant, underlying users’ prospects on the re-opening trade. Exhibit 1: U.S. Vaccinations % of Population vs. Airline, Hotels & Entertainment stocks views on Eikon Still, as COVID concerns return, these re-opening stocks keep being pushed back. These industries remain vulnerable as

Judging a good deal is all about perspective. That’s especially true for budget airline Frontier’s initial public offering. The U.S. carrier is seeking a $4.5 billion enterprise value, putting its relative valuation higher than big peers like American Airlines. A premium may be warranted. But American is also worth more than before the pandemic. That tailwind will disappear. Like other air carriers, Frontier’s business took a hit in the past year as travel halted. Revenue halved in 2020 compared to the previous year, and EBITDA swung to a loss. But in some respects, Frontier is stronger than larger carriers like

Even seemingly good news isn’t likely to help American Airlines. The $10 billion company’s shares surged as much as 60% in premarket trading on Thursday after it received a mention on a public forum that has fueled dramatic gains for companies like retailer GameStop. Ideally American, struggling from the coronavirus fallout, could issue equity at its pumped-up valuation. But the phenomenon might be too fleeting to take advantage. Until Thursday, the Texas-based company had been least loved among its publicly traded peers, at least as far as investors are concerned. It was the most-shorted U.S. carrier, according to Reuters. That

COVID-19 has changed the travel industry drastically this year. Although the TSA has reported an increase in travelers since March, passenger levels are significant below previous years. This year, U.S. consumers are very much concerned about COVID-19 and the bulk of them will be staying home for Thanksgiving, Refinitiv discovered in a survey collaboration with Maru/Blue Public Opinion, a panel and data service insight firm. The survey revealed that 78% of U.S. consumers will be staying in their residences this Thanksgiving. Of those, 60% will stay at home with a loved one, or people they live with, specifically due to

America’s eponymous airline is a bit like its economy: struggling with lockdowns and laden with debt. But while the United States will rebound from the coronavirus pandemic, American Airlines looks less resilient. If its ability to generate profit is permanently crimped, the company’s equity, currently valued at around $4 billion, could prove worthless. Airlines everywhere are grounded, but American entered the crisis in worse shape than rivals. Since it last emerged from bankruptcy in 2013 under Chief Executive Doug Parker, its borrowing has increased from $17 billion to $25 billion. That’s because it decided to acquire new planes, giving it

Norway is offering a lesson in how to limit state support, even in dire times. Its $292 million of taxpayer-funded bailout of Norwegian Air Shuttle will only be extended if creditors agree to swap $4.3 billion of debt for the budget carrier’s nearly worthless equity. Even then, it’s only enough to resurrect Norwegian Air as a run-of-the-mill regional airline, rather than the swashbuckling transatlantic revolutionary that the company once aspired to be. The rescue plan, announced on April 8, leaves shareholders between a rock and a hard place. If Norwegian Air’s creditors, who include bondholders and aircraft leasing companies, don’t

The coronavirus outbreak has severely impacted industries in China, including hotels and motels, travel and leisure, airlines and transportation services. Exhibit 1: Coronavirus Impact on Chinese Sectors Airlines have suffered the most, declining 17.5% year-to-date, compared to a gain of 4.7% this time last year. This makes January 2020 the worst month for global and Chinese airlines since May 2019, as seen in Exhibit 2. Air China, China’s largest airline by market capitalization, has declined 18.0% YTD, while China Eastern Airlines and China Southern Airlines declined 18.8% and 17.8% respectively.  Other airlines with revenue exposure to Asia including Air France,