Well, this could get pretty interesting pretty quickly…
In this post:
JetBlue explores potential merger opportunities
Semafor reports that JetBlue has hired advisers to assess the viability of selling itself to a rival airline, and has specifically scenario-planned how a deal with United, Alaska, or Southwest, might do in terms of regulatory approval. JetBlue’s stock is up over 13% on this news, so on that front, it’s the biggest development that we’ve seen at the airline in a long time.
JetBlue hasn’t turned a profit since before the pandemic, and while the airline has been trying to return to profitability, that has proven more challenging than planned, with seemingly endless setbacks. I imagine things are looking especially uncertain right now, given the situation with oil prices.
Historically, airline consolidation has faced massive regulatory scrutiny, though clearly the belief is that this is the best chance they have, with the Trump administration generally being more open to consolidation than the Biden administration was. That’s a belief shared among all airline executives.
It’s noted that the current M&A planning is preliminary, and the airline could decide not to pursue talks with any other airlines. It’s also not known if discussions have already taking place, or if interest has been received yet. In response to all of this, JetBlue has only released the following statement:
“We’ve made meaningful progress on our multi-year JetForward strategy and are focused on executing the plan. We’re confident JetForward is the right strategy to restore profitability and create value for our shareholders and opportunities for our crewmembers.”
JetBlue and United launched a partnership last year, and all signs point toward United being theoretically interested in some sort of consolidation with JetBlue. Roughly a year ago, United CEO Scott Kirby stated that “the ball is going to be in JetBlue’s court” when it comes to consolidation. However, he has also pointed out that mergers are a lot of work, and that United is already on a good path, and doesn’t need a merger to succeed with its strategy.
My take on a possible JetBlue merger partner
Over the past couple of years, I’ve written many posts about possible JetBlue merger scenarios. Here’s my general take:
- United is the obvious candidate, given what United’s management has suggested, plus us knowing that United’s CEO is obsessed with having a big presence at JFK; however, I think this will be the most challenging for regulatory approval, unless Kirby’s brown-nosing of Trump has finally paid off
- I just don’t see much upside with a Southwest merger, as I don’t really see what Southwest would gain with this, and Southwest also seems to still be committed to sticking to an all-737 fleet, and I don’t think adding two different aircraft types (with several variants) would be terribly logical; but the fact that JetBlue views this as being one of the top three contenders makes me wonder what I’m missing
- Alaska is on some level a great match for JetBlue in terms of expanding more on the East Coast, but the issue is that Alaska already has its hands full with the Hawaiian merger, so that might be more of a task than the airline is willing to take on at the moment
- While it’s not mentioned, I actually think American has the most to gain here, though admittedly the carrier’s balance sheet isn’t in a great position; but I think there’s a lot of upside for American, and if American had a competent and motivated management team, I think this would be a brilliant power play
Frankly, I think even the suggestion that this is being explored could have huge implications for the possibility of a merger, on the simple grounds that this will become a competitive game. Even if United wasn’t necessarily committed to buying JetBlue, United’s management most definitely doesn’t want another airline acquiring JetBlue. So we’ll see how this plays out, but I think it could be an interesting few months.
Bottom line
JetBlue is reportedly exploring the possibility of a merger, with advisers looking at United, Alaska, and Southwest, as the most likely partners. United seems like the obvious choice here, in terms of what the company’s management team has been saying for so long. However, United may also face the most regulatory hurdles (unless the endless compliments of Trump finally pay off).
I’m not sure if United wants to buy JetBlue, but there’s one thing I’m certain of — United doesn’t want another airline to buy JetBlue. While it’s not mentioned, I believe that American has the most to gain with a JetBlue merger, though I wouldn’t trust the current management team to actually be able to execute on that.
What do you make of this potential JetBlue merger situation?
I know this is aviation social media and reality is a casualty of some people's fantasies but let's get just a tad back to earth:
1. It is very notable that JBLU realizes that, after just 25 years, it can't compete even given that it was gifted its original set of JFK slots w/ the promise of it bringing a new era to travel.
2.. This is a report of who JBLU THINKS might...
I know this is aviation social media and reality is a casualty of some people's fantasies but let's get just a tad back to earth:
1. It is very notable that JBLU realizes that, after just 25 years, it can't compete even given that it was gifted its original set of JFK slots w/ the promise of it bringing a new era to travel.
2.. This is a report of who JBLU THINKS might make a merger partner, not who might actually be interested. As long as JBLU is still a publicly traded company (which it is), it has to entertain all offers.
3. JBLU is deeply in debt; none of the airlines mentioned as potential candidates have the capacity to take on JBLU's $7.3 billion in net debt on revenue that is little more than that. JBLU would like someone to buy it but that doesn't mean the economics of buying JBLU are not going to work for any carrier.
4. As much as some people would love to see JBLU carved up between multiple carriers, the DOJ simply does not operate that way esp. in a limited access market like NYC.
5. The common denominator for all of JBLU's markets is Delta which has succeeded in less than 25 years to marginalize JBLU in every one of JBLU's markets. Not a single possible acquirer of JBLU has demonstrated that it can win in a competitive contest with Delta in a DL strength market- NONE.
6. UA, of all candidates, is highly problematic from a competitive standpoint. The very same people that argue about UA's size in NYC try to argue that LGA and JFK are different markets than EWR. Nobody with half a brain is moved and neither will be the DOJ or any of a number of states that could file to block a merger.
7. The most likely scenario is that JBLU just dies on the vine and its assets are made available to other carriers in pieces rather than selling the company in a block to any competitor.
The biggest beneficiary is likely to be the carrier that helped put JBLU in the position where it is now - Delta.
Just check back in a few years to see where it ends up.
Only logical merger partner for B6 is American Airlines.
Network-wise I agree outside of the FLL/MIA issue that would get broken up. But I don’t think AA can afford B6.
Why is it the that US based airlines are always in some sort of trouble and need to talk about mergers? You never hear these things coming from Europe.
@Ed you have clearly not been paying attention. Over the last decades most every European airline has come under IAG, Lufthansa or Air France-KLM. Some of the remaining few independent airlines are also looking to merge (TAP coming to mind quickly).
Jetblue's east coast network would be tempting to Alaska, but they're still busy digesting HA. They may join the takeover battle, but I think it'll be just to hurt United by making them pay too much, not to actually acquire the airline.
I get the "AS gets east coast hubs" thing, but I'm struggling to see how this works for them. Airlines with bicoastal but no midcontinent hubs struggle to maintain the relevance other airlines have. AS could pick off B6 but how do they get me from IND to MSY without having to fly on AA metal or flying to a coastal hub? In an era where credit card partner deals are constituting the majority of...
I get the "AS gets east coast hubs" thing, but I'm struggling to see how this works for them. Airlines with bicoastal but no midcontinent hubs struggle to maintain the relevance other airlines have. AS could pick off B6 but how do they get me from IND to MSY without having to fly on AA metal or flying to a coastal hub? In an era where credit card partner deals are constituting the majority of profits for airlines right now, I don't see his wouldn't distract AS more than it's worth in terms of the operational distraction. And, what on earth would AS want with a mini-hub in FLL with AA's hub 30 miles down the road.
AA/B6 would obviously create the most value by giving NY a third full-service airline choice
Why the shade at AA? Weren’t they positioning well for this until regulators shut it down in 2023?
@ Sel, D. -- For the past decade, American has been a rudderless ship, and the airline is now paying the price for that. I don't think that's at all shade, it's just reality, and financial results reflect that.
I would say that B6 can play hard to get.....play AS and UA off each other. I think UA will ultimately be egotistical and pay way too much for B6 just to keep Alaska off the eastcoast.
I said back then and now....B6 and AS would be the best merger to provide a truly 5th national carrier to compete with the others....this opportunity is now.
They are busy with HA....but most of that...
I would say that B6 can play hard to get.....play AS and UA off each other. I think UA will ultimately be egotistical and pay way too much for B6 just to keep Alaska off the eastcoast.
I said back then and now....B6 and AS would be the best merger to provide a truly 5th national carrier to compete with the others....this opportunity is now.
They are busy with HA....but most of that is relatively finished with the passenger cutover next month. So perhaps keep thier merger staff busy by saying...ok...your done HA....now do B6.....
I think with the ambitions of AS with thier 787s and already a 321 hawaiian fleet....sorry Alaska...you just may need to not be proudly all boeing to stay relevent and thrive nationally.....
And AA will get thier codeshare back through oneworld alliance....via AS.....
Keep Mint, better food and beverage, free WiFi, and IFE on most aircraft, and that’ll be a win.
What’ll actually happen is they’ll turn JetBlue into United, and I’ll cry.
That would give me a smile that'll follow me to my grave.
Letting UA/B6 merge in places like BOS and FLL while being required to cede a lot of slots to AA at JFK and LGA could be the regulatory compromise.
There are no regulators under this regime. The fox controls the hen house. We can vote in 222 days to change that. Might be wise.
Will, I like it
Anything that results in the death of Noo Yawk's Hometown Airline, I'm in favor of. Until then, remember that Mint is Shint.
Enjoy that Malört, ya Fine Illinois Brethren.
When I was initiated forty years ago, I did enjoy it. Our Hometown Airline is going to win this and destroy B6 forever.
I will accept this, reluctantly, so long as B6 starts serving stroopwaffles… deal??
None of the carriers need the whole package of JetBlue.
What is needed is just certain segments of their market strengths, like what has been needed out of all other recent mergers or potential proposed tie ups outside maybe of the Hawaiian Alaska merger.
Maybe someone can explain the math to me of how airlines are making money on coach fares. For those of you so upset that fares might increase.
George Nathan Romey… our resident Concierge Key economist… why don’t you do the honors, sir.
Just an excuse to raise airfare prices even more.
@ Jacob -- Respectfully, most airlines in the US are losing money, and their cost per air seat mile is higher than their revenue per air seat mile. So it's hard to argue that airfare is unreasonably expensive.
Does American have the financial power to pull it off? And how much more work is left in the Alaska/Hawaiian merger?
@ dn10 -- With American, it's hard to say, especially given what a fragile time it is.
With Alaska and Hawaiian, I think it's not so much the amount of work left, but instead, acquiring money losing airlines and trying to make them profitable isn't necessarily easy work. Alaska's stock hasn't been performing that great post-merger (even beyond the current crisis), so one wonders if Alaska is as enthusiastic about acquiring another money losing...
@ dn10 -- With American, it's hard to say, especially given what a fragile time it is.
With Alaska and Hawaiian, I think it's not so much the amount of work left, but instead, acquiring money losing airlines and trying to make them profitable isn't necessarily easy work. Alaska's stock hasn't been performing that great post-merger (even beyond the current crisis), so one wonders if Alaska is as enthusiastic about acquiring another money losing airline. That's especially true when you consider what a well run and profitable operation Alaska was when fully independent, and sticking to its core strengths.
Curious what's going to happen with 25 years of Mosaic 1 status earned through last year's promotion if there's a merger...
Let's see how far would my 25 years and 350k points get me.
You’re probably about to lose it. Classic anti-consumer bait-and-switch. USA! USA! USA!