Airline megamerger hopes fade, as budget airlines seek Trump help
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The chances of a mega-merger in the airline industry now appear slim, but a spike in jet fuel prices still has the weakest players scrambling for options.
Why it matters: A prolonged rise in jet fuel prices — a quarter of an airline's costs — will widen the divide between the haves and have nots in the industry, potentially winnowing out some of the budget players.
Driving the news: United Airlines CEO Scott Kirby said Mondayhe was giving up hope for a deal with American Airlines, saying American "declined to engage."
- He acknowledged he approached American about a possible merger "because I thought we could do something incredible for customers together."
- "Without a willing partner, something this big simply can't get done," he said in a statement.
Between the lines: The budget airline business has already been slumping in competition with the likes of United and American.
- A group of them are now seeking financing from the federal government as they grapple with the spike in jet fuel prices.
"The White House is aware of outreach that was made by a group of budget airlines to the Department of Transportation, and the Administration continues to monitor the health of the U.S. aviation industry for passengers and airline employees," White House spokesperson Kush Desai said in a statement.
- "Unless an announcement is officially made by the Administration, however, any discussion about federal policymaking should be regarded as baseless speculation."
Zoom in: The group of budget airlines that includes Frontier, Avelo and Spirit is seeking a "liquidity pool" of $2.5 billion from the U.S. government that it says would be "used exclusively to offset incremental fuel costs."
- The Association for Value Airlines — whose members include Frontier, Spirit and Avelo — said in a statement that it had met with Transportation Secretary Sean Duffy last week to discuss its proposal for "a necessary and targeted measure to stabilize operations and keep airfares affordable during this period of volatility."
Those talks come as Spirit Airlines — which at risk of liquidation — has been in advanced discussions to obtain a lifeline of up to $500 million from the White House.
- President Trump buoyed the budget carriers' hopes for help when he vocalized support for airline competition and critiqued the potential United-American deal.
What we're watching: Whether Congress lends support to the White House on a potential deal for budget airlines.
- Several prominent lawmakers — including several Republicans — criticized the prospect of a Spirit bailout.
- But the idea has support from unions representing flight attendants and pilots.
