Issue No. 869
South American Reawakening
Latam and Gol Lead Charge to Post-Pandemic Normalization
Pushing Back: Inside the Issue
As America’s Independence Day holiday approached, airlines and their customers braced for more operational distress. Simply put, airlines, airports, and air traffic control towers throughout the U.S. are understaffed, owing to tight labor markets and earlier downsizing. The problem, however, goes beyond the U.S., frustrating airlines in many parts of the world as they try to capture a summertime travel surge after two years of extreme demand weakness. Demand is so strong, in fact, that not even sky-high fuel prices are getting in the way of what should be a solidly profitable third quarter for many carriers. The Orlando airport, for one, expects this year’s Independence Day holiday period to be no less busy than it was in 2019.
As airlines struggle to operate their schedules, the boardroom drama of the year continues to intensify. Spirit was all set to hold a shareholder vote June 30 on whether to accept a merger proposal from Frontier. But that vote was postponed, again, likely after insufficient support. The vote is now scheduled for July 8. JetBlue, of course, wants to buy Spirit as well, but, despite repeatedly sweetening its offer, has failed to convince Spirit management. The stakes are high — either combination would create America’s fifth-largest airline behind Southwest and ahead of Alaska. And scale, as consolidation has shown, brings big advantages.
In other news across the industry, Airbus bagged a big narrowbody order from China, the U.S. DOT gave tentative approval for a Delta-Latam joint venture, Gol is seeing business revive, Lufthansa is bringing back some A380s, and United’s pilots appear hesitant about a new contract agreement.
Lo and behold, the second quarter of 2022 is now history, capping off a busy first half that saw air travel finally start to normalize, at least in some geographies. But at the same time, inflation became a scourge in many nations, led by rising energy prices which left airlines paying a lot more for their fuel.
The Airline Weekly Lounge Podcast
For those who hoped we'd have a resolution to the Spirit Airlines merger saga this week, no dice. The carrier delayed, again, a key shareholder vote on whether to merge with Frontier. Edward Russell and Jay Shabat discuss the latest turns, and why JetBlue is so keen to acquire Spirit. Also, the outlook for July Fourth holiday weekend travel in the U.S. Listen to this week’s episode to find out. A full archive of the 'Lounge is here.