Airline consolidation has been a big topic of conversation in recent times. We’ve recently learned that JetBlue is reportedly looking to be acquired, and we’ve even seen the Transportation Secretary talk about how “Trump loves to see big deals.”
Generally when people think of potential consolidation in the US airline industry, Delta is an airline that doesn’t even come to mind. So while we’ve heard endless comments from United CEO Scott Kirby about mergers, we’ve heard very little from Delta CEO Ed Bastian… until now.
In this post:
Ed Bastian’s comments about airline consolidation
During yesterday’s Q1 2026 Delta earnings call, Bastian was asked about how he sees the industry playing out over the coming year given the spike in oil prices, etc. Here’s how he answered:
“You have a considerable portion of the industry that has not returned its cost of capital, has not made a profit in years. Going back over the last decade when we saw consolidation happen, we forget what drove consolidation. What drove consolidation was higher fuel prices back in 2009, 2010, 2011, and we were the leaders in that with the acquisition of Northwest in 2008.”
“I anticipate higher fuel prices will cause much more significant structural reform than we’ve seen over this period. COVID, I think, was a different animal, where no one was strong enough to engage in the type of rationalization that was necessary.”
“As we look forward to building a healthier business for the future, there’s a number of business models that I think their owners are going to start questioning whether they continue to commit capital to. However that plays out, it’s going to be of benefit to Delta.”
There are three key takeaways, as I see it:
- Bastian says that the number one thing that drives consolidation is higher oil prices
- Bastian expects “significant structural reform” in the near future, based on airlines being “strong enough to engage in the type of rationalization” necessary
- Bastian says that any type of consolidation or bankruptcy will be to the benefit of Delta
Are Bastian’s airline merger comments surprising?
I think I’m a bit surprised by the conviction with which Bastian is making these statements, assuming I’m understanding them correctly. Bastian is saying that he expects “much more significant structural reform” than during any similar past crisis?
It seems he’s suggesting consolidation rather than airlines just going out of business, based on the sentence after the above referencing how airlines now have the financial strength “to engage in the type of rationalization that was necessary.”
In terms of consolidation, it seems to me that any sort of a deal would include Frontier or JetBlue (or I suppose Breeze or Avelo, though those airlines aren’t publicly traded). So I question what kind of “significant structural reform” Bastian could be referencing?
Also, it’s of course logical for airline executives to spin everything as a positive, but I love how Bastian suggests that any and all consolidation is good for Delta. Yes, overall consolidation is good for existing players, in terms of eliminating competitors. But if we start to see Alaska, American, or United, acquiring JetBlue, then I think it’s hard to argue that will be a net positive for Delta (yes, there might be some concessions, but I don’t think they’ll be greater than the new competitive threats).
Bottom line
Delta CEO Ed Bastian has indicated that we could see significant industry consolidation in the near future, even more than we saw around 15 years ago, during the last major round of consolidation. However, he insists that any and all consolidation is good for Delta, even if the airline isn’t involved.
He’s more enthusiastic about consolidation than I would’ve expected, so I look forward to seeing how this all plays out.
What do you make of Bastian’s consolidation comments?
Follow his comments and what it means for how he runs the business and what he will focus on etc
The US market needs more competition, not less...
I think Ed Bastian is right that when you have abnormally high oil prices you will see more consolidation like in the past. I saw an article recently that said if the war continues and the oil prices remain high for the next several months to a year the low-cost carriers like Spirit, JetBlue, and Frontier that are struggling could end up going out of business or merge with each other.
For those who think domestic airline service is horrible and ticket prices are trending too high too quickly, what do you think is going to happen when there are, say, two fewer major domestic airlines operating than there are today?
"However, he insists that any and all consolidation is good for Delta, even if the airline isn’t involved."
Less competition in the industry means higher prices. I'm sure the big 3+SW+AS would rather compete among themselves than with 4 others. Per Investopedia: "Oligopolies are stable market structures characterized by a small number of firms that collaborate to control prices and market share, often resulting in higher profits and restricted competition."
Plus if Delta isn't doing...
"However, he insists that any and all consolidation is good for Delta, even if the airline isn’t involved."
Less competition in the industry means higher prices. I'm sure the big 3+SW+AS would rather compete among themselves than with 4 others. Per Investopedia: "Oligopolies are stable market structures characterized by a small number of firms that collaborate to control prices and market share, often resulting in higher profits and restricted competition."
Plus if Delta isn't doing consolidation, it won't be giving any concessions.
Keep UA, DL, and AA away from B6.
Transcon NYC premium competition needs to be vigorous.
AS/B6 would be the better outcome for pax - keep a viable premium transcon competitor going. They took over Virgin America and via that know how to handle the Airbus transition, though would that mean the end of lie flat Mint given what they did to VA?
I would LOVE this !
AS is in absolutely no position to take on B6' $7 billion in net debt. Not sure anyone else is but AS certainly isn't.
If B6 takes a trip through bankruptcy first, lots of people could be interested.
As much as I like AS, the last time they bought an airline, they grounded the Airbus fleet and pulled out of the premium transcon business. Not sure they have the know-how to compete in that space.
Transnational JV’s and 25% holdings? A partial answer for smaller lines. Example Porter, Westjet and JetBlue
Interesting
They don't seem to work well long term, but interesting for pax
You think this administration is gonna green light a deal with Canada? Psh, not until they’re annexed… (and I say this as someone who loves Canada and Canadians and respects their sovereignty.)
Ed loves mergers. He can "cut" costs and disguise it as a merger. He's an accountant and can thank Richard Anderson for Delta's success.
Fewer competitors will mean less competition which will mean more pricing power (aka higher prices) which is good for all of the industry players, whether or not they participate in the mergers.
How very Tim Dunn of Ed. $100 million incentive package is all he cares about; not the company, not workers, not consumers. Greed is one helluva drug.
first, in your socialist rants, you conveniently and frequently ignore the fact that US airline employees are paid well above average compared to US workers as a whole. And DL employees are some of, if not the highest paid in the US industry. Hard to comprehend how you come to the logic you do.
second, consumers are paying for DL's product and services. What chafes you and others is that other airlines cannot command the...
first, in your socialist rants, you conveniently and frequently ignore the fact that US airline employees are paid well above average compared to US workers as a whole. And DL employees are some of, if not the highest paid in the US industry. Hard to comprehend how you come to the logic you do.
second, consumers are paying for DL's product and services. What chafes you and others is that other airlines cannot command the fares DL gets.
third, DL has figured out how to build a business that is more resilient than any other airline; the refinery is, once again, paying off big time along w/ DL's other revenue streams including their engine overhaul business and their industry-leading relationship with Amex that no other carrier will be able to match.
drugs are failing to admit and cope with reality= which is where you and a whole lot of other people live.
Consolidation will come and I can assure you that if it does, it will be far bigger than B6 by UA or F9 acquiring the scraps of NK.
DL and WN will be sizable participants in the process.
Half of consumers are of below average intelligence. They're Delta's target market.
I'd like to think I'm not below average intelligence and I am certainly Delta's target market. I live in FLL and do not want to fly any LCC and I'm certainly not spending 2 hours in rush hour trying to get to and from MIA when I live 10 minutes from FLL even with traffic. DL's Florida "shuttles" from ATL that are almost hourly to MCO, FLL, TPA and MIA keep a lot of us...
I'd like to think I'm not below average intelligence and I am certainly Delta's target market. I live in FLL and do not want to fly any LCC and I'm certainly not spending 2 hours in rush hour trying to get to and from MIA when I live 10 minutes from FLL even with traffic. DL's Florida "shuttles" from ATL that are almost hourly to MCO, FLL, TPA and MIA keep a lot of us moving about the country.
That said, If UA acquires B6 the entire map in Florida changes...and likely not to the benefit of DL. Where DL could win is in the cities where they can pick up some gates for incremental growth: MIA, AUS, JFK, etc. Where DL also wins is in capacity rationalization. DL will pick up market share from this alone.
My bigger question is whether or not DL is shopping around and kicking the tires on any of the LCCs and ULCCs that are seeking a buyer. Given some of the statements made by the Administration it's doubtful DL would be challenged. I'm not even sure this Administration would oppose a DL-B6 tie up, which in other Administrations would immediately get challenged.
how very predictable that you denigrate the people that make a company successful because your company can't figure out how to generate the same revenue as DL
And who do you think DL will acquire?
I expect DL will do what any other carrier would do given consolidation opportunities - which is to strengthen themselves in places where they are not as strong as they would like.
I'll leave it to you to speculate who has what that DL might want and how they might get it
The biggest whole in deltas map is Texas and Central America, at least form what i can tell.
"What chafes you and others is that other airlines cannot command the fares DL gets."
No, the rest of us don't give a crap about what fares Delta or any other airline get. Why would we? We're the ones paying those higher fares.
Of course Delta benefits. As well as the other Big 2 airlines. And of course the public losses when an airline is consumed by one of the big 3.
Can you explain how the public has "lost" from the other rounds of consolidation?
Airfares are still near historic lows when adjusted for inflation. ULCCs have exploded point-to-point flying between small markets and desirable leisure destinations. Airlines have invested in consumer-facing amenities (though not well in some cases). Most airports had one of if not their best year last year, indicating consumers are picking up what the "consolidated" industry has put down.
Might some of...
Can you explain how the public has "lost" from the other rounds of consolidation?
Airfares are still near historic lows when adjusted for inflation. ULCCs have exploded point-to-point flying between small markets and desirable leisure destinations. Airlines have invested in consumer-facing amenities (though not well in some cases). Most airports had one of if not their best year last year, indicating consumers are picking up what the "consolidated" industry has put down.
Might some of the point-to-point go away? Likely. But, if it is replaced with higher frequency flights to hubs where you can actually get somewhere that would appear to be a benefit. It's not "how many places can I get to non-stop." Instead, it should be looked at as "how easy is it for me to get from point A to point B?"
United just needs to buy B6 and end the misery.
that would seem to be the most talked-about merger possibility - but talking about it still doesn't solve that
1. UA is already the largest carrier in NYC by revenue - due to having more longhaul flights - and goes back and forth w/ DL on number of passengers w/ DL being the largest domestic carrier w/ the most total number of flights. There are real antitrust concerns with either DL or UA growing...
that would seem to be the most talked-about merger possibility - but talking about it still doesn't solve that
1. UA is already the largest carrier in NYC by revenue - due to having more longhaul flights - and goes back and forth w/ DL on number of passengers w/ DL being the largest domestic carrier w/ the most total number of flights. There are real antitrust concerns with either DL or UA growing larger in NYC or any other market.
2. B6 has over $7 billion in net debt - which is 40% of what UA has even though UA is much larger. UA will either have to pay a handsome premium to strip out the best assets or take on that debt. UA has massive capex over the next few years so their debt will soar if they take on B6 and then try to make what it acquires from B6 profitable.
B6 could take a trip through bankruptcy to get rid of debt but that process likely cannot take place with a merger after chapter 11 while the current administration is still in power.
and there are going to be other mergers and asset transfers in the industry and the DOT seems ok w/ "cutting up" carriers to allow some airlines to get larger while protecting public interest.
and to the comment about how DL will benefit from any or multiple mergers, DL significantly overlaps with AA, B6 and NK, all of which are financially weak so any improvement in how those 3 airlines are run will help DL.
“Any improvement” as to how competitors “are run will help DL”? I’m an economics professor. You’re really gonna need to explain the logic behind this statement, because it is utterly alluding me.
please don't admit to those credentials and tell me you do not understand that having multiple competitors that consistently operate at a loss are a drag on any industry.
United is still carrying $25 billion dollars worth of debt, if they purchased JetBlue they would add JetBlue's $10 billion dollars worth of debt. United's debt is still way above their pre-coved debt levels whereas Delta which just announce their Q1 2026 results has finally lower their net debt below covid levels.
United has used the post-covid era as a spring shot and has significantly closed the gap between themselves and Delta but one...
United is still carrying $25 billion dollars worth of debt, if they purchased JetBlue they would add JetBlue's $10 billion dollars worth of debt. United's debt is still way above their pre-coved debt levels whereas Delta which just announce their Q1 2026 results has finally lower their net debt below covid levels.
United has used the post-covid era as a spring shot and has significantly closed the gap between themselves and Delta but one place where Delta outshines UA and it isn't even close is paying down debt. Not all mergers are created equal and United at $35 billion dollars in debt if they were to purchase JetBlue would have to cut a lot of unprofitable flying in JetBlue's network but also in United's network which could open the door for Delta. The only reason United wants JetBlue is for access to JFK but the DOT would force United to divest either at JFK or EWR even though EWR isn't "slot" control but it could still present Delta with an opportunity.
I don't think Delta is necessarily interested in buying or merging with another carrier but I do think they hope consolidation will take place as debt laden carriers are less nimble than carriers with less debt which could create areas of opportunity for Delta.
Although I don't think Delta is interested in buying or merging with another carrier I do think if there was one carrier Delta would love to take over it would be Alaska. A takeover or merger with Alaska would solve Delta's SEA problem and give them a significant advantage out West.
And I would love DL to acquire AS. I think that the route networks are complementary and maybe some AS DNA would seep into DL and remind them of what premium really is. And I'd instantly become a 3MM. Because, really, it's all about me.
I was thinking the same relating to a potential AS-DL merger and have to wonder if that would be a response to a UA merger.
AS is still working on integrating Hawaiian and then there’s the debt and variations in fleet.
It would be a great marriage but maybe only on paper at this juncture
The common well known phrase or saying is ….. “Who cares”?
Seems you do since you read the article then commented.
Trolling isn't a cute on anyone, even our resident troll.
The US pumped tons of money into the US economy and to airlines during covid. Airlines that should have failed did not.
Even before covid there were airlines like AA and B6 that were barely profitable. Since covid, a number of other airlines were added to that list.
There is way too much capacity flying in the US that is being flown by airlines that are not profitable -which is undoubtedly why the...
The US pumped tons of money into the US economy and to airlines during covid. Airlines that should have failed did not.
Even before covid there were airlines like AA and B6 that were barely profitable. Since covid, a number of other airlines were added to that list.
There is way too much capacity flying in the US that is being flown by airlines that are not profitable -which is undoubtedly why the DOT Secy recently said that they would support further consolidation.
DL and every other airline would benefit from the removal of some capacity from the system.
The real question is what role DL takes in consolidation but it would be a mistake to think that DL won't participate in it. Bastian also noted that DL led the last major round of consolidation with the NW acquisition.
DL is the strongest airline in the US from a financial standpoint, runs a good operation, and yet still, like other airlines, has opportunities to grow its network.
The DOT Sec'y's comments that there will be assets spun off if the big 4 mergers are open indicate that they are willing to support carving up some airlines in order to address antitrust concerns.
The real issue is that most of the poor performing airlines have significant debt; no other company is going to be able to take portions of an airline without paying a premium to cover the debt or those airlines - or the remaining parts go through chapter 11 bankruptcy first or after a partial acquisition.
It isn't worth trying to speculate what DL might be interested in but it is certain that if consolidation starts, there are industry assets and market positions that DL would be interested in.
I don’t remember a time in my long life that the airlines weren’t discussing mergers in the industry.
The question is who are the people who are buying stock to become shareholders of any airline besides United or Delta?
Even so, most view airline investments as short term trades than long term investments.
As Warren Buffett has said, airlines are an extremely though investment thesis. They are very cyclical business and have very high costs.
Of course Delta benefits. All of the surviving airlines benefit. Airlines barely exist in competitive market, more consolidation further entrenches the oligopoly.
The big airlines already move the lockstep about anti-customer changes - it's basically collusion, which should not happen in actual markets.
And underpinning all of this is that the big airlines enjoy risk free capitalism - anytime things get bad, we bail them out.
Any merger activity will be in the smaller end or one of the major five (AA, UA, WN, DL, AS) potentially buying JetBlue. Any of the other smaller airlines, most of which are financially struggling, really won't do much for any of the major five. What would DL need with Avelo?
Bastain is obtuse and arrogant. He thinks he is the American Singapore Airlines but in reality is just a better Spirit
I’m guessing Delta turned you down for a job?
Yet they are the most profitable airline in the industry and have the highest customer satisfaction rating for years. Do your homework before babbling such nonsense
No one should be surprised by Bastian's "conviction." These calls are all about crafting a narrative, either for Wall Street, employees, or both. Whether or not he actually believes any of it is another story.