JetBlue is once again exploring a merger or partnership, and this time, it is naming names.
JetBlue Eyes Merger With United, Alaska, Or Southwest…But Only One Path Really Makes Sense
According to Semafor, JetBlue has been actively evaluating potential acquisitions by several airlines, including United Airlines, Alaska Airlines, and Southwest Airlines. Specifically, it is simulating which path would offer the least resistance to regulatory approval.
JetBlue may not be a basket case, but it has struggled to consistently generate profits under its current business model. Its blocked merger with Spirit Airlines and the collapse of the Northeast Alliance with American Airlines have left it strategically adrift. I’ve written before about JetBlue’s challenges and the broader implications of consolidation in the U.S. airline industry, and those issues have not gone away. If anything, they’ve intensified.
What JetBlue Is Looking For
At a high level, JetBlue is looking for scale, stability, and a clearer strategic identity. Well, and most importantly, profit and shareholder return.
The airline has long occupied an awkward middle ground: not quite a low-cost carrier, but not a true full-service network airline either. That model can work in good times. It becomes much harder in periods of cost pressure, rising fuel prices, and aggressive competition from both legacy carriers and ultra-low-cost airlines.
Thus, while I’m anti-merger in general and would love to see JetBlue survive as a stand-alone carrier, a merger offers a way out. JetBlue brings strong positions in key markets like New York and Boston, a differentiated onboard product, and a loyal customer base. What it lacks is the network breadth and cost structure to consistently compete at scale.
That’s why a merger or at least a strong partnership makes sense.
The Candidates: Some Make Sense, Others Don’t
Not all potential partnerships make sense.
Southwest Airlines is reportedly in the mix, but I don’t think the Dallas-based carrier is a good fit. The business models are fundamentally different, and Southwest has historically struggled with integration complexity. That said, Southwest could be willing to overpay, much like Alaska Airlines did when it acquired Virgin America. I would not rule it out.
United Airlines is another intriguing option, especially given recent hints from Scott Kirby and other executives about renewed interest in New York JFK. But there’s a problem.
While speaking in Los Angeles earlier this week, United CEO Scott Kirby said, “That partnership is going great. We look forward to getting back to JFK. One of the things that was attractive was similar philosophy on customers.”
But United already has a major hub at Newark. Building out JFK in a meaningful way would require significant concessions, both operationally and from a regulatory standpoint. Running dual hubs in such close proximity is far from straightforward.
A more realistic scenario? United lets another carrier acquire JetBlue and then picks up valuable assets like JFK slots as part of the divestiture process that would actually increase competition for consumers.
Alaska Airlines may be the most logical fit.
A bi-coastal Alaska, anchored by its West Coast strength and JetBlue’s East Coast presence, would create a compelling network without as much overlap. There is also precedent here: Alaska successfully integrated Virgin America, albeit at a steep price.
I know Alaska is still “busy” with the Hawaiian Airlines merger, but I continue to see Alaska as the strongest candidate.
Finally, there’s American Airlines.
In other ways, this remains the most compelling option.
The Northeast Alliance between American and JetBlue made a great deal of sense from a network perspective before it was blocked by Biden-era regulators. Reuniting the two carriers in some form would strengthen American’s position in New York and Boston while giving JetBlue the scale it desperately needs.
It would also create a more credible competitor to Delta Air Lines in the Northeast.
I don’t think regulatory risk is the problem in the Trump era, though I count nothing as given, but I’m just not confident the team at American Airlines has a the resolve and vision to aggressively pursue such a deal.
I should note that the Semafor article lists Alaska, Southwest, and United as potential merger partners, but does not include American Airlines.
CONCLUSION
JetBlue thinks it needs a partner and I tend to think so too. The question is not whether a deal will happen, but which one will.
From a consumer perspective, a tie-up with Alaska or American likely delivers the most value: broader networks, stronger competition, and a clearer product strategy.
United also makes sense, but I think the price it would have to pay in giving up gates at JFK (or EWR) is too high.
Southwest? Hard to see the logic…unless it’s really willing to overpay.
But whoever the partner ends up being, I don’t think JetBlue can continue as-is indefinitely…and I predict we will see an announcement sooner rather than later.
Who should JetBlue merge with?
Why does everyone think American, the airline with the 2nd largest market cap, makes more sense than United? They are 36B in debt and don’t know how to turn a profit with the most daily flights and most passengers carriedu out of any airline. Also have to take into account merging another airline into the twa/us air/American Airlines work group. Sounds like a disaster.
Because AA cannot profit in its current form and I expect next year, like the last two years, we will have another excuse…Iran, oil, etc, even while UA and DL will still report healthy profits.
AA dream of having the second highest market cap, but they are not close!
I think AA would have a tough uphill battle because the NEA was rejected – a lot of divesture at JFK and possibly BOS would be required to show why this would be different.
With that said, I could see AA pursuing it simply for Isom to keep himself in the CEO seat for another couple years – the board would be reluctant to fire him in the middle of a merger as long as he isn’t completely screwing the pooch.
I do think if there is any way for AA to do this, it will. I also think that while UA says it does not want to overpay, it will be willing to overpay some to keep B6 out of AA’s hands.
Initially, DOJ interfering with the Northeast Alliance was unnecessarily interventionist.
Apart from that, I question what is in this for United if they must divest significant Jet Blue assets in New York. I suppose American could pick up gates at JFK as a result, and those gates would be excellent . . . . for the widebody aircraft which American gave up.
I expect that the highest and best use of Jet Blue’s aircraft and gates is with American. And American should be willing to pay a higher premium than anyone else for Jet Blue. But American does not particularly have gobs of cash lying around, nor do I expect capital markets will trust American with cheap money. With that in mind, perhaps a merger where Jet Blue stockholders get a handsome premium could be done. JBLU is $4.75 a share. AAL is $10.74 a share – perhaps a 1:1 swap would be attractive enough for Jet Blue to enter a merger.
Excellent analysis and good prediction on a possible way to make this work with a 1:1 stock swap with AA.
From a consumer (and worker) perspective, these mergers are not great (less competition, higher prices, less jobs). It’s really only great for the executives, attorneys, law firms, and maybe some shareholders. That said, if all airlines could please adopt jetBlue’s superior hard products, including Mint (suites with doors, which some, like AA’s new XLR and United’s new Coastliner are trying), better food and beverages, free WiFi, more legroom, and IFE on nearly all aircraft, that’d be swell. NEA was good because it included reciprocal lounge access (the current partnership with United, unfortunately, does not). These days, the administration is not going to stop business from doing whatever it wants (unless they upset the Dear Leader), so there’s no better time than now.
let’s be clear that this “study” is nothing more than B6 hoping to find a merger partner now to avoid a trip through chapter 11 which would wipe out what little equity is left in the company.
B6 has over $7 billion in net debt; there isn’t a single airline that is willing to take on that debt to gain annual revenues that are that much higher.
As much as some want to believe otherwise, there is very little appetite and a lot of opposition to further consolidation in the US airline industry and there is certain to be all kinds of legal and regulatory machinations for any proposal involving B6.
The most likely outcome is that B6 ends up in chapter 11 and then, maybe, someone could take an even smaller B6 than today whole – but the industry will have had several years to better compete in B6 markets.
Southwest has deep pocket to pay for Jetblue, and fleet type incompatibility is not a huge hurdle.
Boston is a market both UAL and AAL would like to expand into, due to large number of high income credit card users.
Jetblue shareholders would get best financial return if Jetblue is sold by pieces.
Why not be acquired by Lufthansa? The majority shareholder could be the Bill Gates Foundation, who would them sell its shares to fund food to Africa
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Man, I really hope that if it does happen, it’s with Alaska or United. Alaska could be a more dominant player if this happens, and I frequently fly all 3 airlines, so merging with one or another would be a dream(just don’r kill Mint.)
Yeah, and I sketched out a plan to take the homecoming queen to the prom.
Why would anybody want to buy JetBlue, an airline that is $10 billion in debt and hasn’t made a profit since 2019 with no prospects to change that any time soon?
Slots, planes, customer base?
None of that is remotely worth $10 billion.
Most of B6 debt is aircraft orders which can be drastically reduced by deferring or paying out a cancellation fee. UA has lots of aircraft orders, they can defer or sell the B6 order slots and most of that debt goes away.
As someone that lives in PHX B6 is totally irrelevent. THey offer very few flights and a lot are 2 leg. PHX ISP is a 9 hour day (not counting pre flight time) and requires a 1.5 hour layover in FLL. So it matters not what they do in my prespective. But please no AA! I live in an AA hub and fly UA because AA is so bad.
What an odd O&D to look at. Other than WN, who offers decent connectivity?
I really think AS has a golden opportunity to actually be the 5th national carrier here…from Asia to Europe.
They are almost through the HA digestion….albeit they have some branding questions still….but they are wanting to go longhaul…so i see the 321LRs as a great connectivity mix with the 787s and 330s…..
I would be happy to see AS get this…..but i am wondering about branding here…..i see this as an intengrated carrier but with different branding…i dont see Alaska being on jetblue here…..
It was about time.
How does a combined AS and B6 get a
foothold in the center of the country? Or do they just cater to the coasts?
Find a city big enough to host an NFL team like St. Louis or K.C. and elbow their way in or a smaller secondary city like San Antono or Austin. If they have good routes along both coasts and improving networks to Europe and Asia then creating a hub in the middle of the country makes a lot of sense.
It’s such a pity that Jet Blue want to merge with any of the dregs of the airline world i.e. another US carrier.
If JetBlue offers a stake to a Trump front company/person, federal government antitrust concerns will go completely by the wayside and its sale will be allowed even with bad conditions for consumers.
I would personally prefer JetBlue combine with Alaska, but American Airlines won’t like that. United being back at JFK in a big way would be nice for me, but it could well turn out to be a repeat of sort with United exit from JFK in the years after 9/11.