This week has been a whirlwind in the airline industry — from speculation that United floated the idea of merging with American to the senior government officials and reports that Spirit could very well go out of business.
There is clearly industry appetite for some consolidation that is partly driven by the high oil prices (which saw some pullback on Friday upon the news that the Strait of Hormuz would reopen.) A United-American mega-merger would still probably face immense regulatory hurdles and would be a long shot. It would create the largest airline in the world and the overlap in hubs like Chicago, Los Angeles, and New York would certainly raise red flags among regulators, even under a business-friendly Trump administration.
And Spirit? It looks like the ultra-low-cost carrier’s future is once again uncertain due to high oil prices. Several reports came out this week saying that the carrier could liquidate soon. The carrier announced in February it had reached an agreement with creditors to exit Chapter 11 bankruptcy but now its ability to exit is looking murky and creditors could force a liquidation. The U.S. bankruptcy trustee is seeking to delay Spirit’s exit, arguing Spirit hadn’t given sufficient information on why the new bankruptcy plan would work. Citibank also raised some concerns in court filings, saying that Spirit’s post-bankruptcy plans don’t show how the carrier would perform in the event fuel costs stay elevated.
That was just this week. Next week we’re in for a slate of airline earnings and we’ll see if executives give more color on any potential consolidation.
HITIT + SKIFT
With legacy systems still in place, airlines are navigating a delicate shift toward dynamic offers and unified orders. Early deployments highlight both the opportunity and the operational complexity of modernizing at scale.
EDITOR’S PICK
SKIFT PODCAST NETWORK
The whiff of a potential airline mega merger is raising eyebrows.
In this clip from Airline Weekly Lounge, Gordon Smith and Jay Shabat react to reports that United’s CEO pitched a possible tie up with American Airlines. The idea of two major U.S. carriers combining would have seemed impossible in the past.
But with shifting regulatory dynamics, the conversation explores whether something this big is truly out of the question.
SKIFT TRAVEL 200
How are airlines performing around the world? The Skift Travel 200 pulls the data you need to know to understand the market. Paid subscribers get full access here.
