Airline Merger Smackdown

Plus: The US and Mexico are up to their ears in trade conflicts ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

March 7, 2023

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TOGETHER WITH

Good morning.

The next sequel to Mall Cop could be a legal thriller.

The town of East Rutherford, NJ has filed suit against the owners of the $5 billion American Dream Mall entertainment complex for failing to make good on roughly $7.5 million worth of municipal bond payments and a $400,000 sewer bill. While the mayor getting legal on the mall would usually pit teens against one another, this is more theoretical as American Dream was set to open in March 2020 and claims it still hasn’t been able to fully open thanks to Covid, despite hosting a plethora of events featuring celebs like Kim Kardashian. It’s time to panic in the maybe still-unopened food court.

Morning Brief

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The JetBlue-Spirit merger is getting its wings clipped.

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Mexico and the US don’t see ear to ear.

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Who runs the world? Mujeres.

Antitrust

DoJ, DoT Sue to Block JetBlue-Spirit Airlines Merger

After months and months of delays, the JetBlue-Spirit Airlines merger was finally ready for liftoff, but there’s another tarmac delay — this one courtesy of the federal government.

On Monday, Bloomberg reported that the Justice Department and the Department of Transportation are expected to soon file an antitrust lawsuit to block the $3.8 billion budget airline deal.

Spirit in the Sky

The government is looking to block the merger on two different fronts, sources tell Bloomberg. First: the DoJ will file an antitrust lawsuit in federal court, with the rather routine allegation that a merger will result in less competition and thus fewer options for flyers, which in turn means more expensive airfare. Meanwhile, their colleagues in the Department of Transportation will be moving to block the transfer of Spirit’s airline certificate to JetBlue, citing similar concerns of a merger working against the public interest — notably, it’s the first such move by the DoT since the end of airline regulation in 1978.

JetBlue’s defense, meanwhile, turns those anti-competitive allegations on their head. The airline has long argued a combined JetBlue-Spirit entity would hold a 10% domestic market share, making it big enough to join the four-member club of major airlines — American, United, Delta, and Southwest — which would increase competition overall.

The two sides will have their days (and days) in court, but important stakeholders are already lining up on opposite sides of the cabin aisle:

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In late February, the Association of Flight Attendants, which represents 5,600 Spirit flight attendants, offered its full support for the merger, with union president Sara Nelson dubbing it “the anti-merger, merger” that will create more competition and ultimately benefit its flight attendants.

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The Transport Workers Union, which represents 6,800 JetBlue flight attendants, asked the government to block the merger last month citing fears that the new combined company “has the intent to not fully honor” union agreements in place at both companies.

Snack Time: JetBlue is already offering concessions (the legal variety, not in-flight pretzels). Currently, the two airlines overlap on roughly 11% of nonstop routes. JetBlue says it’ll divest Spirit’s holdings in Boston and New York, a.k.a. the northeast corridor where JetBlue has a significant presence, as well as five gates in Fort Lauderdale. In the jetstream wake of such a move, JetBlue says there will be plenty of room for new ultra-budget airlines to flourish. If so, maybe we’ll see more humane passenger accommodations than Spirit has been known for.

– Brian Boyle

Agriculture

America Could Ramp Up Its Fight Against Mexico’s Corn Policies

The long-simmering US-Mexico corn conflict is about to pop.

The Biden administration plans to request a sit down with its neighbor to the South over genetically modified corn, sources told Bloomberg Monday. Expect conversations to get plenty salty unless one of the parties brings some butter.

Corn-undrum

In November, Mexican President Andres Manuel Lopez Obrador announced the country would phase out all GMO corn by 2024, citing health and farming concerns. He’s since walked back a related deadline for animal feed and industrial use, but the prohibition on GMO corn for human consumption is still set for the start of next year. That decision doesn’t sit well with the US government and agriculture industry because Mexico is the second-largest importer of American corn and 90% of American corn is genetically modified.

“Any interruption to [corn export] shipments will severely affect our farmers and the state’s economy, and have dire economic consequences for the entire Corn Belt,” Iowa senators Chuck Grassley and Joni Ernst wrote in a letter to US Trade Representative Katherine Tai.

Above all else, corn is probably the most important staple in Mexican cuisine, but officials say the country can sustain itself:

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In a meeting last month with Tai, Mexican Economic Minister Raquel Buenrostro said Mexico produced enough of its own corn for human consumption and that the US’ disagreement with the ban was politically motivated. She said any corn imports from the US were complimentary to Mexico’s already robust home-grown stock.

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If the Biden administration requests a formal consultation with Mexico, then the two parties are required to meet under the rules of the US-Mexico-Canada Agreement. If they can’t reach a consensus, then a panel would be formed to judge if Mexico was violating the free-trade policy.

Energy Talks? On top of the corn issues, the US and Canada are also fed up with Mexico’s energy policies. In July, the two countries argued that Mexico was favoring its own government-operated utilities – Petroleos Mexicanos and Comision Federal de Electricidad – and discriminating against US and Canada-owned companies. Famous for his cool, aloof responses, Lopez Obrador said Mexico is not violating any agreements and that “nothing is going to happen,” which has so far turned out to be true. During a summit where President Joe Biden, Canadian Prime Minister Justin Trudeau, and Lopez Obrador were supposed to discuss the issue, it never came up.

– Griffin Kelly

SPONSORED BY PLAID

The (Very Near) Future Is Open Banking

Spoiler Alert: People don’t choose their bank based on the quality of coffee served in the lobby.

Ok, most don’t. A surprising 78% of U.S. consumers actually cite the ability to connect their accounts to apps and services as their top priority when selecting where to park their funds.

This reality is prompting a seismic shift in banking practices, detailed in Plaid’s latest report 一 2023 Fintech Predictions. Here’s more of what’s inside:

Cards Vs. Banks: Learn how the Federal Reserve’s real-time payments platform FedNow is accelerating the cards versus banks debate.

2023 Crypto Forecast: Did the bitcoin groundhog see his shadow? Find out whether the crypto winter is here to stay or the market is heating up in a hurry.

This report also features Plaid’s second-to-none analysis on the consolidation among anti-fraud services and B2B fintechs, plus the reason “every company will be a fintech company.”

Get a jump on 2023’s fintech trends before they happen. Download Plaid’s report right here.

Equality

Spanish Government Wants Minimum 40% of Companies’ Boards To Be Women

(Photo Credit: Elliott Brown/Flickr)

El futuro es femenino.

Today, Spain’s government sent a proposed gender quota bill to the country’s cabinet, which will now head on to congress. The bill would mandate that companies as well as the cabinet ensure their boardrooms are 40% women. Incidentally, International Women’s Day is tomorrow.

Womanning Up

According to Bloomberg, Spain does relatively well when it comes to women at its top corporate levels, with many companies on the Ibex-35 (Spain’s version of the NASDAQ) already meeting the 40% threshold.

The government’s proposed law is tailored towards not only enforcing the 40% quota on every Ibex-35 company but also imposing it on smaller corners of Spain’s economy:

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If it makes it through congress, the law would make the quota mandatory for all publicly-traded companies by July 2024.

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After two years, the quota would become mandatory for all companies with over 250 employees and revenues of over €50 million.

“If women represent half of society then half of the political power and half of the economic power must belong to women,” Spain’s Prime Minister Pedro Sánchez announced Saturday. While 40% isn’t quite what you’d mathematically call “half,” it’s a start.

Statistical Inference: Raw figures of women in boardrooms don’t necessarily tell you if a country’s business culture is feminist. A survey of the UK’s FTSE 100 companies in November found that although they occupied 40% of roles on board seats, 90% of those seats were non-executive positions, and only nine CEOs in the survey were women. “For real change to happen, women simply must be in the significant decision-making roles of CEO and chair,” Prof. Sue Vinnicombe of Cranfield School of Management, which contributed to the survey, told the Financial Times. So Sánchez had better keep a close eye on the job descriptions companies turn over.

– Isobel Asher Hamilton

Extra Upside

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Milk Monkey: HelloFresh stops sourcing coconut milk from Thailand because it could be a product of forced simian labor.

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Slow Down: High consumer spending might not be great for the US economy.

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Just For Fun

Say cheese.

Object permanence.

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