Which way does it go tomorrow. If you had to make a cool right now. What do you think's going to happen.
Thanks for having me on. So our board has recommended a four vote for the frontier
transaction. And to be clear the vote tomorrow is whether or not we do a deal with Frontier or we do nothing.
So there is no proxy vote with regard to a Jet Blue transaction. Our shareholders are voting on whether or not they want to stand
alone or they want us to do a deal with Frontier. And we believe the deal with Frontier is an extremely accretive transaction.
Not only is it do the things that Barry outlined in his interview with you but more importantly our shareholders get
equity in that deal and they get to participate in the upside of that transaction and the return of the airline business as we
get past the pandemic. So our view is that on a pro forma basis that transaction is worth north of 50 dollars which is well in
excess of where we trade today and well in excess of what Jack Lew is offering. So we think it's a very very good deal for our
shareholders. Okay. I hear what you're saying about the fact there is no proxy
Jet Blue vote tomorrow. But do you really think that if the frontier bid is voted down tomorrow that you will remain a
standalone entity. Well I'm focused more on getting us to a yes with Frontier. I do
honestly believe that is the right transaction for our shareholders for the reasons I just outlined. Not only is it
good for our shareholders it's really good for the consuming public. There is an opportunity here for the combined business
to to more effectively compete with the larger airlines here in the United States. We believe based on third party analysis we
can deliver north of a billion dollars annually in savings for consumers. So in this regulatory environment we think that's a
narrative that actually gets us across the goal line. In contrast with that Blue is selling a story where they're going
to they're gonna take seats off the airplane and raise fares. And we think that's a challenge.
The frontier and the 50 you're referring to is potential. Robbins speed is 33 50 and it's a certainty. I appreciate.
There's regulatory issues around that. But we're going to a pretty difficult environment Ted. A recession is possible. Why
shouldn't shareholders look more at the Jet Blue off and see more certainty that.
Well I think I think the reasons are some of what you just alluded to although I would like to add some emphasis to it. We
believe that the regulatory story is quite challenged and that the chance of that JetBlue transaction potentially being
approved here in the United States is very low. So on a probability adjusted basis what would happen is you would be
waiting north of two years in a protracted legal debate with the government probably a lawsuit. And at the end of that you would
probably not have an approved transaction. And the only thing left for our shareholders would be a reverse termination fee.
And that's not the prize we're fighting for here today. What we're fighting for is a bigger stronger business. And while
there is no risk on the horizon of recession or whatever that is this business will recover. It has been in a difficult period
over the course of the pandemic and the right place for investors to be is in the low cost side. And so a combined
frontier and spirit gets that done. Ted I'm going to pick up on what Guy was just talking about. So we had a central bank panel
on for an hour and a half earlier. And basically central bankers are saying we're going to have to tamp down inflation
expectations even if that means a recession are really destroying demand. And I'm wondering how long you can sustain
it. How long does the frontier deal make sense. How much time can you handle a recession before you've lost value for
shareholders. Well historically U.S. species have performed relatively well in
recessionary periods. In fact that's generally the period where they outperform the market because what you find is that people
are trading down in their buying decisions and they're looking for lower cost travel. And the best people to deliver that the
best institutions to deliver that are the low cost low fare airlines. So if you look over the last two decades what airlines
have performed very well regardless of the economic cycle it's you USC season the United States and Europe and Asia. And so we
think that for that reason this is why this is the right bet. You talk about the fact that investors are going to have to wait
to go through the regulatory rigmarole that is likely to occur. If we were to see a Jihye Lee takeover tend to be on the spirit
frontier is going to face quite significant regulatory oversights as well. The Biden administration is making it very
clear that any airline combination of significant size is going to elicit such scrutiny. How long do you think it would take to
get your deal done and what kind of concessions would you have to offer in order to get it across the line.
Well we're in the midst of that regulatory review right now. The government has issued its second request and we've responded to
that request. We're kind of going through that process. But that was all expected during our our analysis early on and at the
announcement period back in February. So we're sort of on schedule right now still targeting the tail end of this year for
foreclosing to the extent that it is protracted. What I would tell you is that our business would continue to operate exactly
the same way it's operating right now. Were you FCC penetrating the market continuing to grow. I wouldn't speak on behalf of
Frontier but I would expect they would do the same. I don't know if that would necessarily be true with a JetBlue transaction. I
think that the operating covenants in the in over that regulatory period would be different because we are different
businesses. They are a higher costs higher fare airline and we're a low cost low fare airline. And I think that would create
challenges for our business and risks that are not fully appreciated by the market. I'm Ted Proxy Advisor ISIS and take
advisors now favor the Jet Blue deal and that was a shift. And I'm wondering do you have a sense of their conversations with
shareholders that haven't made a decision yet over the frontier deal. Are you worried they're going to sway some last minute
undecideds. Well we're we're getting close to the goal line here so I'm not
sure that I can guess. You know a lot of our institutions will vote very late. So I think we'll be reading the tea leaves as we
move ahead. So we're not quite sure where we land there but we're still very bullish on the transaction. We we've been
spending a lot of time with our shareholders trying to and starting to gain some momentum here heading into the vote. But
you know we'll we'll we'll learn more over the next 24 hours. Obviously we'll know as by the time we head into the vote
tomorrow how our shareholders are viewing the transaction. Clearly believe it's the right move and leaning into that today.
Ted when did the supply chain issues that the industry is facing start to ease. When do the labor shortages that are bedeviling
the industry start to taper off. When does jet fuel come back down again. What is your sort of operational take on what is
happening here on the demand side and be on the supply side. Well demand's very strong so we can start there. It's been a
nice resurgence here heading into the peak periods travel periods here in the US. The spring started it off and now the
summer we're heading into its very strong load. Factors are very high. People are back traveling which is great to see. We
definitely see supply restraint or excuse me. You know supply chain issues for the airline business were very labor intensive
business. And that ends up being one of the the principal issues is we're fighting a very low unemployment rate here in the
United States. So that's still a challenge for us. Jet fuel is very high historically and more importantly the crack spread on
it is very high which is which is pushing the business as well. But overtime what's what's great about our business is supply.
Demand does reset when you have higher input costs. Usually that leads to a different supply of seats. And that's how we gain
pricing traction and make sure we're in balance.