Akbar Al Baker, CEO of Qatar Airways, has hinted at plans to buy a 25% stake in a U.S. “startup” airline. If I’m a betting man, I’d say that is JetBlue.
Speaking to reporters at an air show in Kuwait earlier this week, Al Baker (“His Excellency”) told reporters that it was in talks to buy a 25% stake in a U.S. airlines.
Importantly, Al Baker stressed that the U.S. airline approached Qatar Airways and not the other way around. Al Baker stopped short of saying Qatar was interested, though I believe that was implicit in his discussion.
After years of profitability, Qatar Airways has been hit hard with blow after the blow. The Middle East electronics ban last year deeply hurt business travel and diplomatic rows with Saudi Arabia and the United Abab Emirates have cut off valuable routes. Qatar Airways will report a huge loss this year.
So investing in the lucrative U.S. airline markets seems like a smart move at this time.
Why JetBlue?
Qatar Airways flies to New York twice daily and Boston daily. Imagine if Qatar Airways customers could easily book domestic connections on partner that wants to do business together, not just an alliance parter. Sure, both Qatar and American are part of oneworld and have to work together to some degree, but American has been clear: it does not want a closer relationship with Qatar Airways.
> Analysis: Why Qatar Airways is Buying a Stake in American Airlines
Also Imagine JetBlue commencing transatlantic service to London and other popular cities in Europe with onward connectivity via Doha to the rest of the world.
It could easily be a win-win situation for both.
Don’t forget government contracts as well. Currently JetBlue partners with Emirates. By slapping JetBlue codeshares on Emirates flights, Emirates has been able to win business from the U.S. government. Perhaps Qatar Airways is eyeing similar opportunities.
CONCLUSION
JetBlue missed out on obtaining Virgin America and seems hungry for growth. A closer relationship with Qatar Airways may provide exactly that. We will see if/when/how this plays out…
Photo: Akbar Al Baker / FLICKR (CC 2.0)
JetBlue is not privately held, it is publicly traded.
https://finance.yahoo.com/quote/JBLU/
Wow, great research there for that blog post. Jet Blue is privately held. #AlternateFacts
Fixed…
JettBlue owns a minority stake in JetSuiteX and I’ll bet that Qatar Airways also has an ownership stake in the company. I can definitely see parallel services being offered…
With regard to airline alliances… It is interesting to note that although Qatar Airways belongs to one world and JetBlue does not currently have any affiliation With any of the major alliances, Lufthansa owns a 16% stake in jet blue…
Frontier is probably the only viable privately held airline that would have approached QR. Their IPO was stalled due to Kirby’s comments on the UA investor call and probably devalued F9 quite a bit. This is a way for them to punch back.
When Emirates wins government contract routes, it is JetBlue that “wins” the contract by bidding the codeshare route. This is potentially very lucrative for the middle man and could be worth a lot of money for Frontier to facilitate some bids for Qatar. I’d imagine that QR would find some high volume fifth freedom government traffic routes to launch and bid on.
AFAIK, LH already own a stake in B6, which would restrict the amount QR could take due to US foreign ownership laws, unless LH is selling (if they haven’t already).
Also, B6 will have been flying for 18 years this year. This may not be the startup we’re looking for…
As others have noted, Jetblue is a publicly traded company, and has been for quite some time.
Frontier has yet to have its Initial Public Offering, or “IPO”, and indeed is still privately held by Indigo Partners LLC, a private equity fund that has a long history of investing in, and/or financing starting up, airlines.
One of the principals of Indigo Partners is Bill Franke, who co-founded the fund and is its Managing Partner.
Franke’s background includes CEO of a company now known as Smurfit-Stone Container (fka Southwest Forest Industries) and he was the Chairman of Circle K who is credited with restructuring that convenience store’s bankruptcy in the early 1990s.
Franke’s airline industry background began when America West, then a new entrant based in Arizona, was struggling financially in the early 1990s, and was asked by that state’s leaders to save that airline and remained its Chairman between 1993 and 2001.
Franke is currently Chairman of Frontier, as well as Wizz (Hungary), and in addition to America West (which bought USAirways before buying American Airlines earlier this decade), Indigo Partner’s investments have included Spirit Airlines (since sold), Volaris (Mexico), Tiger Airways (Singapore) and JetSmart (Chile).
Indigo Partners is also reportedly seeking to expand its favored Ultra Low Cost Carrier model into Canada by acquiring a substantial stake in an airline called Enerjet, which to date has been a charter airline lacking certification to offer scheduled service.
Getting back to the speculation regarding Qatar’s possible investment in a domestic US airline, if it’s privately held and already in existence, then the candidates are very limited, with Jetblue likely not fitting this criteria.
However, Frontier in terms of its ownership structure being private would fit that criteria, but its route structure, single hub in a bitterly contested three-way hub (Denver, where both United and Southwest have a much larger market share) and otherwise leisure oriented, often seasonal and/or sparesely served, markets otherwise hardly would appear to offer any other kind of synergies with Qatar’s gateway cities in the USA to feed its long haul flights.
Further, there hardly seems to be any kind of “fit” between Frontier’s high desnsity, ultra low cost carrier model, and Qatar’s full service premium offerings even in coach/economy.
So, if any investment is contemplated by Qatar in Frontier, it would appear to be more of a passive one, than to create some sort of network feed to offset the isolation/pariah status imposed by our country’s Big 3 Oligopolist airlines who have been seeking to undermine the success of the so-called Middle East 3 airlines whom our crybaby airlines insist/allege enjoy unfair government subsidies.
Who knows? Since Jetblue would’ve seemed to be the most logical candidate, but is publicly traded, and Frontier, while privately held, would otherwise seem to be a complete mismatch, perhaps this investment is to fund a startup which our country DESPERATELY needs, and would also be a very nice way of saying “Forget U” to our selfish, arrogant, greedy airlines who have spent copious sums of money on high priced blowhards…er “lobbyists”, consultants, etc…and whom have labored for years to eliminate or sharply restrain/curtail the inroads made by Qatar and the other two Middle East-based airlnes who have exploited changes in bilaterial/multi-lateral aviation treaties to develop super connecting hubs in cities that are well located along key long established major global trading routes that can better offer single connecting flights between cities, regions, and continents that our airlines and their alliance partners with their double and triple connections cannot offer nearly as efficiently as the ME3 do.
I guess as the expression goes, time will tell and we shall see who receives this infusion of cash if this deal comes to fruition.
PS: there were also several published reports last fall that the visionary and legendary founder of JetBlue, Azul and other companies, David Neeleman was eyeing a new startup airline for the USA.
And that even a web site for Neeleman’s new venture seeking job applicants appeared briefly.
However, within weeks of those published reports regarding the brief appearance of a web site linked to a business venture Neeleman was known to be asociated with, both in the blogosphere and in “traditional” media, Neeleman issued a statement that his efforts were directed towards something far more limited than the intial press reports that better resembled the very small air taxi-like jets that Jetblue has invested in on the west coast called JetSuiteX, which is a public air charter “airline”, which Neeleman is seeking to offer on the east coast.
This type of “airline” might offer the type of feed to Qatar’s key east coast gateways that better matches the premium experience the Middle East 3 airlines offer far better than anything Frontier in its present form possibly could.
Just a thought, anyway…
Howard,
You have too much time on your hands. Please find something better to write about.
Howard, I appreciate your comments. Thanks for taking the time to write.