Out Fox The $treet

Update - March 6 No surprise the government is looking to block the acquisition by JetBlue. The question is whether the DoJ actually has the right to block the merger. Besides, Spirit shareholders are likely better off without a deal. Regardless, the stock has fallen to the yearly and covid lows as the market apparently doesn't understand Spirit is better off without JetBlue.  Regulators are reportedly looking to block the prospective merger between JetBlue Airways ( NASDAQ: JBLU ) and Spirit Airlines ( NYSE: SAVE ), sending shares of the latter sliding. Both the Department of Transportation and Department of Justice are looking to  halt the deal on the grounds that the merger would be anti-competitive, according to Bloomberg. Per prior media reports, executives from the carriers met with the DOJ in late February  in a "last-rites" meeting  to assuage regulatory concerns on the planned merger. That meeting followed  reports earlier in February  that the dep...

Unfortunately it doesn't appear that The Street video can be embedded, but it is very interesting to see the CEO of JetBlue (JBLU) make it clear that he wants access to the Reagan National airport. Remember that the Reagan National airport slots dominated by US Airways (LLC) and American Airlines (AAMRQ) are prime reasons for the DOJ lawsuit to stop the merger. It is clear that it would be very easy to transition some airport slots away from that merged entity in favor of JetBlue and probably just about every other domestic airline. The DOJ lawsuit just doesn't hold water as any airport that becomes non-competitive will quickly attract further airlines. See the video here . Disclosure: Long LCC. Please review the disclaimer page for more details. 

As with most sectors, airline stocks generally trade in the same general direction whether up in bull markets or down in bear markets. Typically the better company in the sector outperforms, but for an investor picking the right group is the major battle. In the case of the airlines, the whole sector is gaining as historically strong profits and reduced competition from consolidation promises to continue the profits streak. In more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Typically buyout news can be very bullish for the industry and competitors of the firm bought. Potentially less focused competition or even a higher premium for stand alone operators can be very positive. In the case of the airlines, that usually isn't the case. As soon as one airline leaves, another usually is born to take their place. Despite being a long term losing industry, airlines seem to never lack for new entrants. Today's news that Southwest Airlines (LUV) is willing to buyout AirTran (AAI) for a roughly 69% premium is huge for shareholders of both companies and especially AAI. This deal allows LUV to more effective compete in the NorthEast not to mention to enter markets such as Atlanta. Does that make JetBlue (JBLU) or American Airlines (AMR) an attractive acquisition now that one competitor is gone? Hmm, more and stronger competition from LUV doesn't seem ideal. The headline of their press release says it all " Southwest Airlines to Acquire AirTran; Spre...