Yet Another Value Podcast - MDC Financial Research's Michael Cohen post-closing arguments update on $JBLU / $SAVE merger trial

Episode Date: December 7, 2023

Michael D. Cohen, CEO & Director of Research at MDC Financial Research, LLC, joins the podcast for the second time to share his thoughts on the JetBlue $JBLU / Spirit Airlines $SAVE merger trial now that closing arguments have been made. Known for their “Event-Driven Legal” investment-research, Michael Cohen and his team follow significant legal disputes and are closely watching the $JBLU / $SAVE case. For more information about MDC Financial Research, please visit: https://mdcfinancial.com/ For more on the SAVE / JBLU trial, see podcast #204, Michael's first appearance: https://www.youtube.com/watch?v=BFN_iXHdF78 Chapters: [0:00] Introduction + Episode sponsor: Alphasense [1:41] Update since half-time report: overall thoughts on trial now that we have had closing arguments - $JBLU / $SAVE merger trial [3:55] $JBLU / $SAVE merger trial closing arguments [11:04] Feel for how Judge is likely to craft opinion on the case [14:20] Potential additional remedies to get merger over the hurdle [17:02] Market definition and timing of the deal (how does this affect consumers) [23:41] Step 3: the burden of proof from the DOJ, showing there is harm to consumers [24:32] Cont'd: timing of the deal (how does this affect consumers [27:51] United Airlines testimony [35:03] Commentary on Spirit's survivability if merger doesn't go through [41:38] JetBlue's second expert witness [43:43] Dr. Chipley's testimony [45:54] Closing arguments cont'd: competition be preserved [48:02] Closing arguments cont'd: balance of nationwide benefit vs. local harm [52:28] Main divergence of opinion based on being in the courtroom [56:52] Hot docs [59:05] Odds of merger going through closes vs. failing vs. re-pricing Today's episode is sponsored by: Alphasense This episode is brought to you by AlphaSense, the AI platform behind the world's biggest investment decisions. The right financial intelligence platform can make or break your quarter. AlphaSense is the #1 rated financial research solution by G2. With AI search technology and a library of premium content, you can stay ahead of key macroeconomic trends and accelerate your investment research efforts. AI capabilities, like Smart Synonyms and Sentiment Analysis, provide even deeper industry and company analysis. AlphaSense gives you the tools you need to provide better analysis for you and your clients. As a Yet Another Value Podcast listener, visit alpha-sense.com/fs today to beat FOMO and move faster than the market.

This episode is brought to you by AlphaSense, the AI platform behind the world's biggest investment decisions. The right financial intelligence platform can make or break your quarter. AlphaSense is the number one rated financial research solution by G2. With AI search technology and a library of premium content, you can stay ahead of key macroeconomic trends and accelerate your investment research efforts. AI capabilities like smart synonyms and sentiment analysis provide even deeper industry and company analysis. Alphasense gives you the tools you need, to provide better analysis for you and your clients. As yet another value podcast listener,

visit alpha-sense.com slash FS today to beat FOMO and move faster than the market. That's alpha-dash-sense.com slash FS. All right, hello, welcome to the Yet Another Value Podcast. I'm your host, Andrew Walker. If you like this podcast, who'd mean a lot, if you could rate, subscribe, review wherever you're watching or listening to it,

obviously five stars helps a lot. With me today, I'm happy to have on for the second time, I'm the founder of NBC Event Driven. Mike, how's it going? Well, it's great to be here again. It's my second time. I enjoyed it the first time, man. It's an honor, and I'm happy to be back.

Well, you know, we're going to be talking airline mergers again. So you're quickly becoming a frequent flyer. I think they would term you for a podcast guest. But we're going to talk, I'll get to that in a second. Before we get to what we're going to talk about, just a quick disclaimer to remind everyone, nothing on this podcast is investing advice. That's always true. Maybe particularly true today.

We're going to be talking again about a legal situation. neither Mike nor I are lawyers, though Mike may have stated a holiday in Express last night. I'm not sure, but neither might. We're certainly not lawyers. So keep in mind, two non-lawyers comment on a hairy legal situation, not financial advice, keep that in mind. Anyway, Mike, we're having you on because you and I did, actually, one of the most popular podcasts we've ever done at this point was the halftime report on the JetBlue Spirit trial. You and I were talking December 6th. The trial wrapped up yesterday. Yesterday we had closing arguments. You were in the courthouse every single day. So, You know, you and I wanted to talk about what's going on in the trial. So I'll turn it over to you. What were your overall thoughts of the trial? And then I'll respond with kind of specific thoughts. Well, as I recall in our halftime show, I was still on the fence. And we were just, I believe, you know, I think we were eight days through.

And we thought we weren't quite at halftime. It turned into only a 60-day trial instead of 20. So we actually were at the halftime. And just a few witnesses after that, I became bullish for the defense. defendants. And I feel that way consistently throughout the trial. And I felt that the closing statements, or I should say the closing argument, they gave me actually more confidence in the position. That being said, there is an off, I would say more people in the room are on the side of the DOJ. There's a lot of people that think this deal is not going to close in addition to all the other

problems of, you know, DOT and potential repricing. So there's a clear path, you know, to either position. I feel, I like Dr. Hill. I thought he held up better on cross-examination. He was the defendant's expert. And I also think that just my read of the judge, I think he's on the defendant's side. So we'll find out when the ruling's actually issued. But it's a close call.

and I would definitely, at this point, leaning for the defendant. Perfect. My internet cut up for a split second there, but assuming you didn't notice any problem, I heard everything you said, so we'll just power through. So, look, it's tough because,

again, you were there every day. I read your recaps every day. I know, especially after the first podcast, I think a lot of Wall Street was reading your recaps every day because the trial would close. Your email would come out like 30 minutes later and the stock would jump up or 5%

as everyone to subscribe. I was like, oh my God, the trial went well, the trial didn't go. But neither good or there. Again, not financial advice, just to remind people that. But I feel bad because there's been, there were multiple days trial. There were lots of interesting things that came out. But, you know, the closing arguments were yesterday. The closing arguments are kind of the whole shebang. They're summarizing everything.

So I think that's where we have to start. And, you know, the judge, she opens the closing arguments up with questions do not indicate the inclination of the court in any way. Don't read into anything I'm asking. So of course, let's read into everything he's asking. I guess, you know, the first thing, just your overall takeaway. I think the judge asked a lot of questions. of both the government and the defense, your overall takeaway seems to be that the judge was kind of a little bit more in favor of the defense? Like, where were you getting that read through? Okay. There's a couple comments he made that I, and I'm sure other people in room took this different. I felt that he clearly telegraphed that he saw a dynamic industry. He even

asked a question of, you know, they're asking for a permanent injunction. What would an injunction look like if I don't agree with their state of the market, you know, essentially saying it's a dynamic marketplace. He point blank to the DOJ, I believe, twice said he's uncomfortable shooting a permanent injunction. I came away from the closing, feeling more like it might not be binary, but might be a sort of tailored decision. My read of the judge, I think he likes to have everybody happy. I don't think he wants like an in-your-face loss to the government. I think he'd be more likely to kind of have a, you know, throw them a bone where they can get a press release if it looks like it's a good thing and what they did here, even if they lost. So I'm a little bit more

leaning towards who we might get a little bit of a nuanced decision where the merger is allowed with some conditions. I think that the biggest question now is, um, what those conditions would be and how, you know, of much he might molest the pure player down the deal. I am completely with you. I feel like the judge, everything he was doing here was screaming to the parties, settle, settle, settle. And it goes back to, you know, earlier in the trial, JetBlue was testifying. I think it was their CEO who was testified, hey, you know, we thought the government would have questions, would have discussions on divestures with us. And they just never even started talking to us. Like, we craft.

these divestures all on our own. And that was sticking to my mind because the judge, he asked both sides multiple times about divestures. And when he asked Jeff Blue, they said, hey, look, we think our divestures are fine. But if you create, if you craft other divestures, like, yes, we will agree to them, you know, within the scope of the contract, obviously. But they were kind of open to it. They were guiding him to what he could do. And then when he asked the defense, he said, hey, I don't want to do a permanent injunction is what he started. And he said, what remedies do you think would solve this? And the defense came out and said, none. Like, we think the scope of this merger, the harm is so great, the only way to prevent

harm is to block the merger. I was just like, this seems like a judge trying to satisfy both sides, guiding them to settle, seeing where the middle ground is. And I was just very surprised by that from the government. And for that reason, I don't expect the government to settle. I even think the government might be confident in its case at this point, just as there's many in the rich barb community that are. When he was looking for how injunction could be tailored and some guidance from them. You know, he's like, or the employer for the DOJ, we need a permanent injunction hard stop.

There's no way to remedy the harms here. And he was adamant in that point. And the judge, you know, to his face, I'm uncomfortable issueing a permanent injunction. Now, my thinking is you don't tailor an injunction to not have the merger go through. Right? Yes.

So it's really, to me, he's giving a path, I believe, for the merger to go through. And it's just a question under what circumstances. Is it something that would be, you know, clearly lesser of value to the combined company and then, you know, trigger a repricing? Is it something, you know, very minor that, you know, is really just a face-saving gesture to the DOJ? per the case well let me back up a second I saw a different judge in there in closing arguments than I saw through all 16 days of the trial and all 16 days of the trial and towards the very end he even said I need to become an expert on the law he needs to become an expert on antitrust law and he asked a lot of questions that he clearly wasn't now it looks like ever since we saw him last week since and he's been studying antitrust law because he was saying the cases that I'm, you know,

he was referring to his own study. He corrected the DOJ once on the way they saw a case. He seemed to basically accept that he has to do the, you know, Baker use analysis and the step one, step two, step three, the presumptive markets. He asked

questions of how he can consider things outside the presumptive markets. But still realizing he has to stay within the Baker-use framework. It was, I think that's something that's notable that the judge during closing arguments is now much more prepared for, you know, his ruling. And I think the questions that he asked here are then more telling than, you know, a lot of the things that he said in the last 16 days.

And my remember, so I have two questions on this, and I'll leave, these were actually later questions, but I'll leave forward because they think. Well, here. Am I remembering the correction he made to the government was the government said something? This relates to the step three of the Baker Hughes test. And for listeners who don't know what the Baker Hughes says is, I'm going to have, I think I'm going to have Lionel Hutz back on and we'll talk about all the lawyerly stuff related to that. So we don't need. But step three involves substantial harm is if I remember correctly the quote. And I think the government tried to say something as reasonable, likely harm. And I think the judge correct them and said, it's not harm. It's substantial harm. Am I remembering that correctly? Um, there was a correction in there. I'd have to go back to my notes to remember the specific semantics of it. Um, and well, let me, uh, no, no, it's fine. And I'm safe remembering. I mean, I read your testimony. I read your recap in three other recaps and I talked to a bunch of people. It's like I was there, but I was not there. I was seeking of the baby. Let me ask my other question. You mentioned how the judge go, oh, go ahead, please. I would just him say one of the things that the government was saying is that it has to be a timely, uh, timely, likely and substantial in terms of, you know, the rebutting, which was really the step two. And then I do think there was a correction on the step three. And it was a slight shift in semantics, but I'm not remembering exactly what that is. It was just interesting. But we can talk about that later or some. The other question I wanted to ask, you mentioned how the judge was much more prepared on case law.

And it struck me to, and again, I'm only reading your testimony talking to the people at the courthouse. But it struck me again because at the beginning, he's asking, hey, if I want to, you know, order additional vestures or something, can I do that? He asked Lucio that, if I remember correctly. Here, he's not asking them. He's asking them what he, what he should order, and he's asking around the remedies that they would accept everything. So he clearly got more comfortable there. I thought reading your notes, reading the cases he cited, and actually, I'll step back a second. Judges do not wait for a trial to fully end and then start writing their opinion. In general, the judges are thinking of the opinion as they're going through the trial, they're researching it,

they're putting, that's my understanding how judges work. I haven't been a judge, so I don't know. But that's my understanding. Go ahead. I believe he stated I'm going to start working on this right away. So I got the impression he's getting a head start. He won't issue anything, obviously, before eight days and the findings affected, and conclusions law. But I didn't get the impression that he was going to wait for that filing before he starts working on it today. I think he's working on it today. Where I was driving is he he's already started research and he's already started crafting. And to me, the way he engaged with the defense and the cases he was citing were cases that would, that would suggest he's writing a, the merger can go through with these

conditions. Like those are the precedent cases he seemed to be citing. Now, I've asked a few people this and I've gotten different answers. So I just want to ask you, was that your feel? Or do you think he was also citing cases that would be hard block or cases that? That would be, yes, anything in the world can go through. What did you feel about the cases he was citing? That was my general sense that it's allowing, well, it's allowing it. And he phrased it two different ways, one which is more to the DOJ, he was saying, you know, he didn't, he was uncomfortable with a permanent injunction. What would be like the trigger event for it to, let's say if a spirit filed for bankruptcy,

or something like that, you know, what trigger event did we get it wrong? And then, you know, the injunction dissolves. So he was asking questions of how to tailor an injunction. And to the defendant, he was asking, how do I tailor a conditioned approval? He was kind of experimenting with both sides. The number and frequency of those sorts of questions makes me feel that it might not be, you know, either a flat-out permanent adjunction hard stop or a, you know, flat-out approval. But I don't think he knew exactly what conditions, you know, he's thinking of implying. He was really just, I think, feeling his latitude of what he could do. And both sides agreed that he has that latitude. And both sides also did not want him to go there. Both sides, you know,

wanted the, you know, their full case. That being said, I think the defendants were much more realistic and flexible and said, you know, if you find any harm to a narrowly tailored injunction only around that harm. Did the case- Condition only around that harm. I don't think he came up in closing, but correct me if I'm wrong, it did, but did the case give any indication of, you know, what the additional remedies would be? Because I could imagine thousands of additional remedies, but obviously it needs to be something, especially with this drug, something grounded in fact or reality. Did the case give any indication of what he might be seeing or what he might be thinking an additional remedy that would get this over the hurdle is?

So the 16 days of evidence presentation really didn't. And the reason I say that is I originally thought, and I think I still felt this way at the halftime show, that a lot of it was going to be the relevant markets. We get the experts. And they didn't rebut the DOJ's market. But they also, if you believe Dr. Hill completely, and he survived, I believe, cross examination better than the DOJ's expert, he essentially said there is no harm to rebut. Consumers prefer JetBlue on average. In closing arguments, they made a big point of they didn't define the relevant market over a type of consumer. The relevant market is, you know, destination to destination overlap. And Spirit customers fly that, Jet Bull customers fly that. And, you know,

his position is every time we go head to head with spirit, we get more passengers, we get more revenue. Consumers prefer us. So while they didn't dispute that there may be some spirit customers that would be unhappy, on the whole, consumers prefer blue planes over yellow planes. And the judge had a comment to, I believe it was to Dr. Chippey, which was the DOJ's second expert and said, am I to infer that people would prefer the rather Spartan experience of a spirit plane over the more comfortable seating on the jet blue aircraft, seemingly like, how could anybody think that? And the DOJ is really just focused on price, and the defendants are focused on price for the quality. And it seemed like the DOJ didn't count that consumers, you know, prefer the JetBlue

experience over the spirit experience. And now a quick break to remind you that this episode is brought to you exclusively by Alpha Sense, the AI platform behind the world's biggest investment decisions. Alpha Sense gives you the tools you need to provide better analysis for you and your clients. As yet another value podcast listener, visit Alpha-sense.com slash FS. Today to beat FOMO and move faster than the market. That's alpha-sense.com slash FS. You know, on the Spartan comment, I mean, I sent you, but I really hope this judge is a late-night host

because every late-night host, whenever they want to joke about airlines, it's always, hey, if you fly spirit, like, you know, your life is at risk, or just this weekend, this was the first Saturday Night Live episode of December. Watch the cold open. In the first 45 seconds, Wolf Blitzer,

they have somebody mocking Wolf Blitzer, makes a joke about Spirit Airlines. Like, I really do hope that. But let me, speaking of market definition, there were two really interesting, there were lots of interesting things at closing. You know, there was the dichotomy of the judge saying, hey, if this is a benefit nationally,

but a harm locally, how do I weigh the two? There were lots of interesting things. But there were two kind of interesting things that came up that touched on different pieces of the trap. One was on market definition. JetBlue noted, hey, judge, a lot of what the government seems to be arguing is, you know, the people who fly the ULCCs are going to be

harmed. There's going to be a very low-cost customer who's going to be harmed. I think that's what some of their experts were focused on as well. And JetBlue said, hey, Judge, the market here is not defined as people who fly on ULCCs. It's not defined as people who only fly as ULCCs. Even the government, yes, they don't agree with our nationwide market, but they're doing local markets, right? So the fact that spirit, the largest ULCC is going away should not matter because we have not defined the market as the ULCC market. What did you think about that comment and how did you think the judge took it? I myself took it very well because I prefer, I'm flying jet blue this evening.

And, you know, I have flown spirit twice and both times I swear I'd never do it again. So I can see where a consumer would prefer jet blue over spirit. But I can also see that there'd be somebody who they just want to pay the lowest price, absolutely. And I think that the judge sees that it's going to take a little time before other ULCCs enter. I think the judge was very concerned with the timing differences in terms of harm to those customers. I think that if there is a tailoring, I think it's going to be to ensure the timing is same. between when the dynamic market can come in and replace spirit versus when those customers feel the harm of that spirit price going away.

Mike, this is how you know you're becoming a podcast pro because the timing was the timing was my next question. Look, there were three things the judge really seemed to focus on. The first was he asked both sides a lot about additional remedies. I think we've already talked about that. Maybe we'll come back to it later. The second was, as you said, timing, right? I think at one point he even said, look, I need to weigh if this is a benefit in the long term versus in the short term if this is disruptive and caused consumer arm. And he asked JetBlue specifically, hey, like, when is the market, when is the market, the long-term market I should look at?

And he asked them a lot about the ULCC's filling in. So I can fill in some of the extra details, but I'll just ask you, you know, how did JetBlue respond? How did you think the judge took it on both of those sides? So let me back up a little bit and see a little bit of what I think we can infer big picture case. I think that the market is going, the relevant market is going to be, you know, destination to destination overlap pairs, essentially unrebutted by the defendant. Surprising, because I think we thought it would be Metro, but they really didn't try to go after point to point as the kind of relevant market. And we thought JetBlue was going to go after, you know, national market. And yet

they were comfortable staying in the location to location market. And then when we saw Dr. Hill, we now know why. It doesn't really, if you believe Dr. Hill, it doesn't matter if there is 51 presumptive markets or one presumptive market or any number between. His position is in any market, there's more than just those, even on Spirit Airlines, it's only 33% of their customers that are going at that rock bottom price. And in the total market, the majority of the consumers prefer JetBlue over Spirit. And so

his position is in any market there's no harm to rebut so if you go into the Baker use analysis and the judge believes there's a presumptive market and let me back up on that a little bit I don't even think that it's clear

that there's any presumptive markets because when you look at the DOJ's expert he essentially used one year old data He didn't account that about 35 of those 51 presumptive markets, you know, had divestitures. There's been entrance and exits on each of them. There were slides to show that. I am a little unclear as to how many presumptive markets, if any, the defendants admit to at this point. I thought it might be.

But the government did say in their closing, hey, ignore the 51. If there's one presumptive market of harm, you have to block the deal. and they had to say that because they knew that it wasn't 51 anymore, and the judge would like to be skeptical. I could potentially, I'm not predicting this, I don't think this is going to happen, but potentially you could have a judge say there may be presumptive markets out there, but that step one is your burden. I don't know which ones they are.

How can I analyze them if, you know, I'm looking at 51 presumptive markets from a year ago? I don't know which ones are left. you know, that could be his ruling and it could stop at step one. I don't think that's going to happen. I think it would go to step two. And then I think

Dr. Hill, who I believe stood up better on Cross and I think the OJ's expert is simply there's no harm to rebut. On whole, consumers prefer JetBlue. And while there may be some harm to some of those people

on that route, but there's more benefit to the others to, you know, to overcome that of Seoul. And then we're off to step three, which is the DOJ's burden. And I don't think the DOJ can meet that one. Well, I said we weren't going to do Baker Hughes on this podcast, but we're doing it. I think you did the nice job of step one and step two. So why don't we just lay out step three would be the issue here. Step one is the government's burden, step two's.

dependence burgeon, step three is the government's burden. Can you lay out what step three is and what the government's burden is? That might be actually better for a lionel in detail. Okay. My understanding is, and there was some quibbling over the burden. The DOJ did not feel it was a preponderance of the evidence to them. They thought it was actually lesser than a preponderance. Yep. And it seemed like the judge believed it was a preponderance. I believe he did describe some case law

in that. And and so the DOJ essential in step three has to show, you know, but for the apparent offsetting that there is harm to consumers. Let me go. That was a great

analysis of Baker Hughes. Let me go back to the time frame. So I think Jeff, the judge asks a lot around time frame. He's clearly worried about, hey, you know, when will the ULCCs kind of step into the void left by Spirit? I believe the defendant said, look, Frontier said it will take them eight years to replicate every single route that Spirit flies right now. And they did not promise to do, you know, they did not promise come hell or high water. They will replicate every single exact flight that Spirit does. So you must block this deal on.

I will say I think that's kind of ridiculous. I don't think the judge is going to say Spirit would do 50 of 51 and five other people would do the 50 first, but we must block this deal. But that was kind of what the government was saying. Jeff Blue said, look, I think you need to look at 2027. You don't need to look at 24, 25, 26 and say it's starting to fill. Look at 2007. And then also consider, if we buy Spirit today, it's going to take this 12 to 18 months to

start retrofitting. So they'll still be flying the Spirit kind of yellow planes for the next 12 to 18 months. And then the retrofitting happens over three to four years. So, you know, it kind of takes us five years. Today, merger closes in 2004 or five years of 2009, if you think the competition is coming by 2007, well, spirits are operating through that whole time anyway. So how did you think, I want to be fair to the government? How did you think of both sides and how did you think the government was responding and asking

questions to both sides? The judge, he asked a lot of timing questions and he was very concerned of the mismatch of when people would enter and when the harm would happen. and the defendants did a very good job of shoring up a weakness there because their experts really didn't opine on that. And so he referred to Ms. Ursula Hurley, the CFO of JetBlue. She was the one who said 12 to 18 months just for the single operator permit. That's when you can begin the convergence. So essentially, spirit's not even starting to go away for 12 to 18 months. And then, you know, plane by plane by plane, you're reconfiguring the seats, painting them blue, and the testimony

was that would be like, I believe, three to four years additional time. In the closing, they then compared that to Mr. Barry Biffel, the CEO of Frontier. And while he said, you know, seven or eight, he also made it sound like, I speculate that if, you know, really pressed, I could do it And five. But let me just go on the timing. If really press, I could do one in five. That was replace every route spear dropped, right? Because he said, I also think he said it's going to be a feeding frenzy and we're going to be

filling some of these spirit routes within weeks. I believe that also is only referring to his airline as if, you know, frontier would completely grow into spirit when the reality and Mr. Biffel's testimony was, you know, that that's not likely what would happen and that I would take over every spirit route. it would be, like, as you said, a feeding frenzy of all the ULs, LCs, you know, trying to get them, going after the most profitable ones first, you know, working their way down until, until essentially all profitable routes are replaced. Sticking on the ULCC theme, so I want to come back, there were three things to judge it focused on, we did additional remedies, we did time frame, there's one other thing, but let's stick on the ULCC frame. Stepping away from closing arguments, one of the testimonies that I thought was most interesting was the United States. Airlines witness. This was, I believe, JetBlue's last witness they called on the last day that

JetBlue was actually calling people. They had a United Airlines person came up. And that was, I know, one of the most divisive testimonies. If you thought the government was winning the case, a lot of people heard the United Witness and said, this was great for the government. If you thought the defendants were winning the case, a lot of people heard him and thought this was great for the government. We can talk about all the things the United Witness said. But the one thing that jumped out to me was the United Witness kind of said, hey, we're ordering a bunch of planes. And one of the reasons we're ordering a bunch of planes is because we want to expect we want to do more of our united basics or whatever their low cost offering is and he said hey about 12% of our planes are

united basics and i think jet blue at closing said look united's got 800 planes on order that's more than jet blue and spirit have combined you know 12% of those are going to be basics and there's interesting math around this right so i i just want to kind of focus on that united testimony and how it applies the uLCC market for a second the united witness was he didn't you know have a skin in the game for either so to speak. He was a very honest witness. On direct, he was very favorable to the defendants. And on cross, he was favorable to the DOJ's case. My takeaway is he was a really good window into understanding exactly everything about how United Airlines works and looks at that. For the beneficial to the DOJ, it was clear that the basic seats are like an accordion.

They expand when there's not a lot of demand for the aircraft, and they shrink, you know, when there is. And so if everybody wants to be a business traveler, there's not going to be any seats for people paying less. If they can't fill their aircraft, they're going to use that basic to fill as many seats as they can. And in terms of capacity, and this is beneficial to the defendants, Spirits, planes are 200 to 250, I believe, in total. And United is ordering, I believe, 120 to 150 per year. So when you look at the capacity that the majors are bringing in, you know, losing 30%, or I shouldn't say 30%, 30 seats, you know,

per-spirit airplanes is nothing in terms of industry capacity compared to what's coming in. And the GEOC was making it look like, you know, that loss in capacity is just going to raise airline prices for everybody. Just so everyone knows, Mike is referring to JetBlue, when they buy Spirit and retrofit the planes, because JetBlue gives a little bit more leg room and everything, they're, you know, Spirit flies with 150 seats on their plane. A similar JetBlue plane would have 120. And one argument the government has been making frequently is that's loss of capacity, right? going from 150 to 120, and I'm glad you mentioned it because lots of capacity coming on. But it's so crazy to me that the government could come and say, hey, you're buying someone

and reconfiguring the seats. That's loss of capacity in the market. You know, I've been saying I want to submit a rambling, a rambling, what is it, the testimony from a friend of the court or outside the court into this case being like, Judge, if you rule for the government, you've just decided they could declare protected business models, right? Mike, if you wanted to buy my apartment in the apartment next door and then combine them into one apartment, that's loss of capacity in the New York apartment market. Like, could the government start ruling that that's loss of capacity? It's just, it's crazy.

And this is, again, if Spirit looked at their business model and decided, hey, we need to fly 12, 150, is the government saying Spirit couldn't do that? Spirit can do that on their own, but JetBlue could not do that when they buy them. Like, it's just a very crazy argument to me. And I never really heard JetBlue attack them on that, which was kind of surprising to me. when we saw a velo, when we saw Frontier Allegiant and the aircrafts they're getting, it made it look like there's going to be no loss to me of ULCC capacity in terms of that they, you know, there's many ways of them growing in time into, you know, filling the void that, you know,

spirit, this spirit would create. But when you bring in somebody like United Airlines, you're some of the majors. And I believe a presumptive route is only 30% between the combined overlap for it to the presumption. So there are other companies flying these roots. And it did look very frivolous in terms of trying to argue that the loss of seats from retrofitting to jet blue planes would make any difference in the long run in price. You mentioned that the United Witness was good for both the defense and government. And I just kind of want to summarize to make sure I'm thinking about it. You thought they were good for the defense because they said, hey, we're bringing on a heck of a lot

the capacity and we're excited to bring part of the reason we're bringing it on is we're excited to go after basics and then you go ahead i was going to say the case up to that point because we had only seen uLCC airlines it made it look like it was just you know uLCCs are the only ones offering those fairs when you heard united um it really shows you that everybody's offering unbundled uLCC fairs that's uh ingrained in the industry the only difference between a ULCC in the big four when it comes to the basic pricing is the big four look at it as an accordion because they'd rather fill their planes with higher paying passengers and the ULCCs are dedicated seats so perhaps maybe a way of a condition on the merger might be you have to have

because JetBlue also is a little bit of an accordion with its JetBlue basic you might have to put a guaranteed minimum number of basic seats on those aircraft for a period of time until other ULCCs can come in and fill that market. That could be one hypothetical. Which would maintain ULCC capacity. Do you think just in this hypothetical remedy that you and I are creating their heads, do you think the judge would order that, and again, this is hypothetical, we've never seen this done before. Do you think the judge would order that only on presumptive routes like, hey, JetBlue, you must keep 15% of your seats at the basics price on these presumptive routes? Or do you think he would do it on all jet blue aircraft or maybe

jet blue aircraft that they buy from Spirit? What do you think would the trial? I think it would probably be only on presumptive routes. The DOJ tried to claim harm everywhere just from, you know, the loss of spirit, pretty much every route that Spirit flies. How do you remedy that if Spirit's the only one flying that? Just on the United Front. So you mentioned good for the defense and we went that. And then I think you were saying good for the government. And that's kind of because the government said, hey, United, you played the basics like an accordion. You're not dedicated like the ULCC. That's why you thought they were good for the government or was there something else there. That was a primarily primary issue is that it showed that there is capacity. There is

ULCC pricing. But it's not a dedicated supply to the ULCC market. Let's go back to closing arguments now. So I mentioned that the judge seemed, to me, mainly focused on three things. The first was additional remedies, which we've talked a good deal about. The second was time frame for competition, which I think we've also talked about. And the third was, can Spirit survive as a standalone? And this has come up a few times in the trial. But the judge, I think he even had something that said, hey, what if I blocked this merger

and Spirit files for bankruptcy? And I was really interested in the commentary of Spirit standalone. And for the merger arms out there, no, I'm not talking about this. in terms of an MAE, though obviously you can start bleeding with that if you really want. I'm more talking about in terms of how the judge is going to look at spirits' borderline distress, spirits poor operating performance as it relates to this merger. And I'll lead the witness a little more by saying, you know, the government came out and said, hey, ignore that.

Spirit went on a call and said, we're going to be fine and we're going to get made whole for the GTF issues. And Jeff Blue, I thought, had a really powerful cloak where they said, an airline that is not profitable cannot grow. and they talked about how Spirits pricing peaked in 2017 when you'd identify basic. Anyway, I am really leaving with this. I'll turn it over to you. What did you think how the judge was thinking about spirit survivability and how the sides were responding? I think in some of the questions in the way he asked it, I think it indicated that the judge believes in the flailing firm. He sees harm.

And this is, I think, one of the reasons why he is against, you know, hard sign and government injunction is that what if we do that and we drive spirit essentially into bankruptcy here's a company that's been looking for a merger for an out since 2016 has it gets the deal signed right before his business explodes on it and then we deny that and you know send them into bankruptcy and essentially that would end up harming consumers brought to you by the court and brought to you but a government. And I don't think that the judge was comfortable with that possibility. So, I'm with you. Here would be my counterpoint that I worry about. I worry the judge. This is an 82, 83 year old judge who I think is very concerned with his legacy, right? This might be his

last big ruling. This is first anti-choice trial. This ruling's probably going to get cited in a lot of cases going forward. I personally think he is leaning. He does not want to give the government all the power, I think they would imply. I think he will think through it and realize the power he gives the government. I think he wants a negotiated settlement. That's how I'm thinking. My worry is he and his head has said, I'm going to block this deal. On a narrow reading of the case law, I can find one market that's harmed. I have to block this deal. I'm going to block this deal. But I am worried about my legacy if I am the judge who blocks this deal and then spirit files for bankruptcy nine months later. Does that make sense? That's my, that's the red flag in the back of my mind saying,

oh my God, be careful. Because I agree, I think it's positive. I think he's reading into flailing firm, hey, this company is not going to grow without this deal. They, you know, you can't grow without profits. But that's my worry. What do you think about that? I completely agree with it.

I think that that's why he's, that was the premise of why he asked, you know, should there be timing, should there be triggering events, should there be anything, you know, to prevent that possibility? and the DOJ wouldn't even give them that. If the DOJ was confident in its assumptions that the ULCC is a thriving business model and that spirit is just, you know, one quarter away from, you know, turning into the same company it was three years ago with great continuing growth, why wouldn't it be willing to have some conditions that things can change if them wrong?

And I felt that was a little, I think even the judge's facial expressions was disappointed in their intrancy there. And again, it comes back to me. I thought one of the people have lost it, but one of the most interesting lines was when the JetBlue CEO said, look, it's con for us to negotiate divestures. The government wouldn't even negotiate here. And I feel like a judge who's like a big fan of trials and the law and negotiations. Like for one side not even to negotiate and one side to say, hey, there is. is nothing you could do. Like, there's, again, the government said, there's no remedy except locking the steel that would work. Really? Like, if the judge told Jep Blue, hey, Spirit has 260

planes and 10 airports they fly out of, you have to divest nine of the airports and 259 of the 260 planes, that wouldn't be enough of a divesture? Like, and you have to divest the spirit brand name and sell, like, you can take it or leave it. You can try, you can reject it. But that wouldn't be enough of the divesture to solve the harm. I understand that's really over the top, but there's no divesture that can solve the harm, that does seem crazy to me, you know? And their explanation of why there's no way to resolve the harm is simply, you know, a specific type of consumer that they believe would be priced out of air travel. And there's no way to make it up to that individual. The problem is, that's not the way they define the markets.

You know, we're having all types of consumers flying those destination to the destination. And so it's a little disjointed. I'm going to have to do some more work on it. But again, I want to submit my rambling friends of the court brief, be like, hey, you know who's price out of the market? My dog, Penny. I would love to fly everywhere with my dog Penny. but my dog penny is priced out of the market. You know who is priced to the market?

Like, unfortunately, people who are extremely poor. Yes, they cannot travel. They're priced out of the market. But, like, it is a free market. You can charge enough to get a profit. And if some of these people are getting priced out, like, again, the seats, it's not like these planes are disappearing. It's just going to people, it's like, it's business.

It's going to people who actually can produce a return on their market. And if one company can produce a profit at that lower price, and there is a demand that's not flying. wouldn't in a free market, someone else have the same capacity utilization, get their costs down the same so that they can make it profitable for that person who's out of the market now to fly? Free markets do that. And the supply's there. That's the ULCCC3. The DOJ argued that no one would fill it. And I think the judge did not believe that. Let me ask you a strange question here. I want to go to JetBlue's second expert witness, who was a director of planning

who had never testified as an expert witness before. It was a strange witness to me. They never came up once in the closing arguments. I was just a little surprised by the witness. It never came up in closed an argument. Do you think Jeff Blue just thought they were doing something different and missed? Or was there a reason for that second expert? Are you, I guess, referring to Dr. Chip?

No, no, that's the government second expert, right? I'm referring to Jet Blue's. Okay, got it. I thought he was an ineffective expert. He had never, as he mentioned, never testified before, and it was sort of obvious. So he seemed uncomfortable and unconfident on the stand. He did not do particularly well, in my opinion, on cross-examination. And I think, you know, was to show the flexibility, I guess, in the network planning to help shore up the entrance as a little bit of a counter to Dr. Chifty.

But the entire case, everything Dr. Chifty said to me seemed flying in the face of all the evidence that was before her. Speaking of Dr. Shipty, then. So, yeah, just the JetBlue Second expert, I've just been thinking like, why I just said it again. Let's go back to Dr. Chifty. I believe that the government, I believe she admitted she, right? It was she? Dr. Chifty is a she. She admitted that she did not consider this deal in encouraging new entrants.

And she did not consider future market states. That seemed shocking to me, particularly given how much the judge has said, hey, I'm not considering the market as it was in 2019. I'm not even considering really say I'm considering how it be in the future you know it came up a little bit in closing but how did you think the judge

responded how did you think the judge was accepting the testimony when the government witness said hey I'm not considering this deal on the market I think it was to Dr. Chipney was where he had his comment

so I'm to infer that people would prefer the more Spartan experience of the spirit to the more comfortable JetBlue Seating. Dr. Chifty, her entire analysis, was based on growth rates that would require the individual ULCCs to fill spirit, and then compare those to historic growth rates and say it's unprecedented.

It's a circular reasoning there. It didn't count for something that's never happened before into the ULCs. which was the disappearance of the largest competitor. You would think then they'd have unprecedented historic gross rates to fill that. It seemed to fly in the face of Velo's testimony, Allegiance testimony, Barry Biffle for Frontier's testimony, and I, the judge, he struck part of her original testimony, which was mostly just, you know, describing the industry he thought as, you know, wasting his time. But I think he was very skeptical to everything he was saying because in the closing statement,

he clearly sees a dynamic marketplace, which is the exact opposite of what she was trying to convey. She was making it sound like nobody can fill spirit shoes. and there's if spirit disappears there's, you know, the barriers to entry of pilots, planes and, you know, others. She just made it look like

that the market was broken. And there was no evidence of that here. The judge had two other comments that I specifically, and I'm back into closing arguments now. He had two other comments, questions that I thought were really interesting and that are going to wear the trout. We already talked about the.

three key questions, but there kind of are two more. The first was he specifically said, can competition be preserved even without the exact routes of newcomers, the exact routes by newcomers, you know? So can you preserve if Spears flying Newark to Las Vegas, this deal closes, Spirit stopsline, Newark to Las Vegas? Can this, can competition be preserved because, you know, ULCs pop up in seven different markets elsewhere and the industry so dynamic that that alone kind of just for everything? What did you think of that question? What did you think of that question, and I believe he asked that of the government, and what did you think of the government's response?

I'm trying to remember the government's response. Basically, the testimony from the defendants is, they're mobile assets. You know, you can take planes off one route and put it on another route, and that happens all the time. the DOJ very focused on the individual roots and as if they're going to be permanent I don't think the judge was really on board with that again I think just focusing on the individual roots like they're permanent

goes against what the judge has indicated I think it's against the industry I think it's just missing the force for the trees let me ask on the mobile assets there was a precedent case I want to say it was ball mobility. I can't remember for sure. There was a precedent case cited to, hey, you can consider the mobility of assets. Did the defendants bring that precedent case up or did the government bring that precedent case up? I believe that was during the defendants. That's what I thought. I was always in the beginning. I believe that I believe was a chief judge of Massachusetts who may have been the one who did that. And it seemed like being through

the First Circuit, it seems like that's likely to be a very important case here. I'll have to refresh on the specifics, but I do think it was the defendant who brought that up, and I think you're correct on all of that. One other question, the judge mentioned, and then we can kind of do closing thoughts. You know, the other thing, the judge has to balance

and the judge was pretty clear he's got to balance a lot of things, right? He's got to balance, hey, this might result in four weeks worth of less competition, but five years out it might be better. It might result in four months or less a competition. The other thing he said he had to balance is, hey, what do I do do if I find nationwide, fares will get lower because JetBlue is a better competitor for all

the reasons JetBlue says, spirits in distress, whatever reason you want. The judge said, what do I do if I find nationwide? This is a benefit. But locally, there are some, the presumptive markets, the 51 presumptive markets. There are some harms. How do I balance across those markets? And the government immediately said, no, one local market of harm, you must block the deal. I just want to ask, A, how you thought the judge responds to them saying? And B, did the defense? defense ever put anything on that kind of rebutted that? So the defendants presented their closing arguments first, which is unusual because usually it's a plaintiff first.

That's what I thought, too. I was telling someone. I thought it was normally plaintiffs than defense. I thought it was weird, and I thought we might get a rebuttal because it was so weird. But yeah. I can't explain, actually, why the defendants went first here. But it was from very early in that the judge himself started talking about. about that he has to do this balancing, that he, when he was, you know, accepting that he has to do the baker use analysis, that it has to be on the presumptive markets, he felt he needed to consider competition on the national level. And he even used a word, which was, I believe, I think it's actually a citation from the case we were referring to before. And of

how to manage that sort of a balancing. When he put the same question to the DOJ later, the DOJ was you can look at evidence outside of the relevant markets. And you can look at it for how they would affect competition in the relevant markets. And they were sticking to, it has to still be within the framework of the relevant market. and you can't give any credit to it in terms of the big picture as a whole. The judge expressed he's uncomfortable with it. The judge, you know, if he sees that there's the one presumptive market that you can't remedy

and the law would say you've got to enjoin that, and I'm going to stop something that's hugely beneficial for an entire industry, he seemed uncomfortable with that. And I think that's probably where he's going to be. doing his homework in case law to see what he can and cannot do. He clearly has a desire to give some credit to how the legacy carriers would be affected, which is the real benefit of the entire merger. With mobile markets, like, it makes sense. If two firms combined and they're going to benefit nationwide, but in Minneapolis, they're going to create a grocery store merger. And I say grocery store because the last podcast I did was on Albertson's Kroger's merger.

If they're going to create a grocery store monopoly in Minneapolis, you obviously have to block that because that's a local market harm. And it doesn't outweigh the nationwide, but you've got mobile markets, right? So if Spirit and JetBlue benefit nationwide competition bringing prices down and they create one local market where there's harm, well, then all the other airlines are you say, well, all of our other routes are less profitable. Let's fly an airplane on into that market to create to get some of those prices. And that naturally brings it down. So, yeah, it makes total sense to me. I think you hit on an important point that the way of bringing benefits from the national to presumptive routes is the assets are mobile. In that kind of a framework, it's hard to stay, you know, just in the single, you know, relevant route or relevant market.

two last questions and then we'll wrap when oh good when benefits to when benefits to competition at large you know can affect all of it because you know the outsets are movable I completely hear two last questions then we'll wrap up you mentioned at the front that

you were in the courtroom and it was kind of like you and some people on the bull side thinking that the government was going to win and then there was a professional ARB community or who were there thinking that the government was winning. And I will say, look, if you're in that professional art community, I talk to a lot, maybe it's because I'm biased

and I think this is going through, but reach out to me. I'd love to chat to other people who have divergent views. I love talking about this. If you can tell, I'll talk about this all day. When you talk to other people in the courtroom who were, again, watching the same trial as you, and when I read some bare notes, I feel like it's two different trial. What do you think they're picking up on that maybe you,

me reading through you and other people are dismissing or seeing differently? Like, what do you think the main divergence of opinion was? That's what I was trying to do for all 16 days, and I was unsuccessful in doing that. I think they simply see presumptive markets. They believe there's harm just from the elimination of it and higher pricing. And they believe that that harm could perhaps be rebutted outside of the relevant market, but the law is you have to rebutted in the relevant market and can't be done. And that's a win for the government.

I think that's where they're at. Where I differ is really twofold. One, I thought Dr. Hill's testimony was far more believable and held up better on cross than the government's expert. And two is my read on the judge. I think that they're not factoring in. you know, what the judge is thinking are the comments. I think they're just strictly thinking of, you know, the Baker Hughes analysis and that harm can't be rebutted.

And I think that if, if this judge credits Dr. Hill, which I think he will, I, there is essentially no harm to rebutt. And, you know, that, that, that, at, we saw it's that one. That's a clear win. And then the only question is the timing. If there is a temporary harm and all the evidence that which I think the judges believes that there'd be entrance in the industry, I think any tailoring that we're likely to see is likely to be on the timing differences.

And where they made it sound like, you know, as one plane goes out and one route is lost, you know, the timing would essentially sink. You might just have an assurance on that, such that the judge, you know, similarly isn't surprised that, you know, he allows the merger and then six months later, you know, it's all jet at blue planes and that there's a period of longer term. He might require that they do the conversion no faster than they, you know, said they would, something like that. Yep. No, look, the few bears I've talked to, and again, bears reach out. I'd love to chat on all aspects of this. They basically said what you said. They said, look, prices up. We've got JetBlue internal emails and deal model that says prices up. There's your consumer arm. We've got hot docs from, you know, it's easy to forget now. I think you were largely rebutted, but we've got hot docs from Win Spirit didn't want JetBlue to buy them. And you've got deference to the government. Price is up, hot docks, government deference, boom, done. That's what I say. And I say, I hear you, but I think there's, More to it. And I think, again, I've been impressed with reading how the judge has managed this. And I've talked to lawyers who've testified in front of this judge, who think this is a really

highly respected judge. I think the judge can see a little bit further than the pure absoluteest black and white prices up in a deal model. I think he can look to the real world. And I think he will. But yeah. And now a quick break to remind you that this episode is brought to you exclusively by AlphaSense, the AI platform behind the world's biggest investment decisions. Alpha Sense gives you the tools you need to provide better analysis for you and your clients. As yet another value podcast listener, visit Alpha-Sense.com slash FS today to beat FOMO and move faster than the market. That's alpha-dash-sense.com slash FS. Anything, I want to ask you your odds before we wrap up, but before I ask that final question,

anything else you want to say on the trial that I missed, that we should hit harder, anything else? Yeah, let me add something on the hot docs. I was very concerned of the hot dogs coming in because they looked horrible. And it's always good when, you know, it's your own testimony that you're trying to say is different. I thought they made a very convincing job of that was then and this is now and explained why they, you know, wrote the hot docks and why they felt that way. And I think the judge is going to give very little credit to it. It's basically, you know, as if it was yours, say testimony.

People forget the government won a case six months ago, and the Jepp will use it. I don't think enough. Jet Eble used it. The government just won a case to argue for the JetBlue effects. That is the in precedent trial now. And if the judge wants to rule this, he says, look, the government put on a great case, but let me cite this thing about the JetBlue effect low in prices per consumers. Like, that seems pretty clever to me.

And here the defendants were citing the government's on case in American Airlines, U.S. Air. And, you know, that was beneficial to the defendant. When it came down to closing, I think that the DOJ realized they didn't have a lot there. They didn't. Never mentioned it in closing. The hot docks were all over the opening statements. And the only thing they were sticking to in the closing is the plan, their internal planning for the murder said there would be a 30% price increase. and they made it sound like there'd be no new entrance

and that 30% price increase would be enduring. And that was the one remaining thing that the DOJ grandstanded on their closing. How did JetBlue response up? JetBlue's response to simply is that was a plan. That was before we signed the deal. That was not taking into, it wasn't a business plan. It wasn't taking into many other things in consideration.

and it's, you know, kind of cursory tangential evidence that is not descriptive of reality. Let me ask final question. Last time we did it, a half-send report, you said you were at 50-50 for the odds. You know, here we are. We still have closing briefs, which I think we're going to be important. They're all extremely important, obviously. What do you think, as we sit right here, though, December 6th, what do you think the odds of merger going through merger block are? And that's an interesting question because how do you handle the odds for all the in-between? Well, I will tell you, as a merger arm, I will tell you, if the merger goes through and closes, all the in-betweens don't matter. The win is the merger goes through and closes and the loss is the merger fails, right?

How would you feel about a repricing? So you mentioned it. I've told you offline. I hear repricing all the time, right? The stock is at 14. Everybody says reprise, reprice, reprise, you need to reprise. I understand that there are ways that you can reprise. But I did, Twitter was huge for me last year, right?

You have to have a reason to reprise. And the reason for reprise is you have broken the contract in some form. Somebody needs to point me to what in the spirit contract is going to get broken that would justify a reprise. Are you going to point me to a spirit math? Well, I mean, the JetBlue CFO did not answer when asked about Mac by the government, which, again, I thought was weird and tested, did not answer. But I'm going to find it very hard to believe that the JetBlue CFO is testifying. We're excited to close this merger. The JetBlue CEO, I believe, was at the trial, was at closing arguments other day.

I'm going to have a lot of trouble believing all of that. And they're talking about, hey, we're buying all these airplanes to turn them into our models to be, I'm having trouble believing that they're going to do all that and claim an MAE when they win. Or the other argument is the DOT is going to block this deal after. after the government loses this case and then the DOT will drag this deal out past the walk date and then you have to renegotiate there. I am hugely skeptical for all sorts of reasons I'd have to go in offline, but

you know, in terms of let's set the recut aside. I understand a lot of people. I'm extremely skeptical. I know a lot of people think it is, but somebody needs to point me to the legal place where it is. So let's just say government, judge rules and he can rule anything he wants, but deal closes versus blocks. Okay. Let me play devil's

advocate to that. if you have a condition deal, it's really JetBlue's decision of whether to meet the conditions or not. So they can simply say, we've done best efforts. And they could save them to work a lot. So what conditions are there? Because the merger contract says you have to accept divestures up to an M.A. I suppose what you're saying is the condition is you have to fly all of your flights with 10% jet blue basics in the presumptive markets. If it's an immaterial condition, I would think they'd have to meet it and accept it and close the deal. But if JetBlue could argue that the closed deal is different than, you know, what it was,

when they find. They could say that that's a MAC of the combined company. So I think it's in the judge's hands as to where that materiality lies if he conditioned the deal. I would love. I felt that I was in your camp, that it was very unlikely to be a reprimed. price deal because I saw, you know, Ursula Hurley, Robin Hayes, and all the testimony, they really wanted to close this deal. They were all aware of the impairment. I was very skeptical. I would say since I saw the closing arguments, my odds of a repriced deal have gone up, but my odds of a

path to doing the deal have also gone up. I weigh very heavily him telling the deal. I'm not comfortable with a permanent injunction. And so you don't condition a deal to prevent it. You condition a deal to make a path that it can be done. The question is, what are the conditions and does that rise to the level of something that would materially change the value of the combined company? I just have trouble seeing a condition that would material change.

But if you add it together, you'll approve with conditions that material change plus deal approved, what would that sound so? So, approved, and basically, you're saying if they're willing to accept any changes given and close it, I'd be very high. If they were willing to literally take, I think the judge is going to give them path to close the deal. I would put that at like 80% plus.

whether the companies follow that path if it's super honorous they might choose not to or might choose to reprice in terms of I think the right way to look at it is when the ruling is announced is the share price of spirit likely to go up or down

I'd be about 60, 40 that it would go up I don't want to do too much more there because I always feel hesitant talking about share prices moving up or down on the podcast. And I do want to ask you a bunch. Yeah, I do, but I think people get you, I mean, you're positive. You're bullish that this gets closed. And I think you're more bullish than the market.

You're not as bullish as I am. Yeah, I'm bullish that it's closed. And when I look at the current pricing, I think even a repriced deal is likely higher than we're at. There are going to be some, uh, some spirit. are debt holders who are really going to rejoice at your comments there. Let me ask one bonus question and then we'll wrap it up. Hawaiian Alaska announced a merger over the weekend that I thought was very interesting. I don't want to comment on the merger, but JetBlue did mention it briefly in their closing arguments. Did that, you know, I could see them even mention it more,

more fully in their closing briefs. Industry consolidating. This is further proof. Small people needs to do you think, did the judge give that any weight or was it just kind of glossed over? No. No, I think they mentioned it because, you know, they kind of felt they had to, and it was, you know, current event, essentially. It's essentially not an evidence. It was never presented in evidence. It's only presented in closing arguments. So I don't think if they really want that, they would have to file to supplement the record and actually enter it into evidence. And so I think there is no weight on that at all.

It's also rebuttable because the government's going to say, hey, we don't like that merger either. That merger hasn't closed. We reserve every rank. I think they probably will seek a, we probably will have another trial here, which will be referencing this ruling if there is a trial there. But neither going to. I just wanted to ask because that is topical and last thing. Cool. Well, Mike, again, and look, I gave glowing reviews in the first pod.

I would reiterate them here. Again, I said during the pod, Mike's email would come out and it would say, they went great for defense. They went poorly for defense. And I think some hot money traders would, had subscribed and would. Boom, boom, boom, boom. But look, people are reading this. The recaps were second to none. It was great.

Really appreciate you walking me through this. And look, the good news is there's plenty of other interesting things out there. I've got Lionel Hutz coming on for Laquidia tomorrow, but I know you were at the Laquidia trial. You thought that went pretty well, didn't you? Yeah, I was at that on Monday. And then tonight I'm taking a jet move flight to New York. I'm currently in Boston. And I'm going to be Kenview.

It's a citaminophin. And I'll be attending that. And then finally, I can go back home. to California. There are some event-driven investors who bought the Kenview spin-off from Johnson and Johnson and held on to it, and they need a set of benefit for the headache that that stocks caused them. But that's an interesting one as well. Well, Mike, appreciate you coming back on. Again, we'll include a link to how to reach out to Mike if you want to hear more about a service and everything in the show notes. This has been great. And looking forward to having

you on, probably not for JetBlue, but for a different trial in the near future. Oh, yeah. Look forward to coming back. Thanks. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the host may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.