United Airlines’ CEO Scott Kirby says his dream of merging with American Airlines is dead for now because American is not a “willing partner.” But when it comes to JetBlue, Kirby made clear he would like United to get closer.
Scott Kirby: American Merger Is Dead, But United Wants To Get Closer To JetBlue
United Airlines CEO Scott Kirby appeared on Quest Means Business with Richard Quest this week and offered some candid remarks on consolidation, including his failed overture to American Airlines and his continued interest in doing more with JetBlue.
The American Airlines merger idea is dead, at least for now. Kirby told Quest that a deal of that size could only happen with a “willing partner” and United does not have one.
We saw last month that American Airlines CEO Robert Isom and his team slammed the door shut to such a merger. Kirby may still believe a United-American tie-up would have created what he called the “best airline in history,” but American publicly rejected the idea and called it anti-competitive.
It is true that a United-American merger would be an antitrust nightmare and very hard to defend in a market where consumers already have limited choices in many hub cities. Kirby may sincerely believe bigger would be better for customers, but I do not think regulators (even in the current administration), competitors, or many travelers would agree.
JetBlue Is A Different Story
But JetBlue? That door remains open.
Quest asked Kirby whether he wanted to take the JetBlue arrangement “further” or “closer.” Kirby did not dodge:
“Yes, I do.”
Kirby praised JetBlue CEO Joanna Geraghty, JetBlue’s culture, and the carrier’s customer-focused DNA, then said he would like United and JetBlue to do “as much as we can together” as partners rather than combining the two airlines.
Of course, that is a huge distinction and comes after odd comments from Kirby mocking whether a merger was ever a serious possibility.
To be clear, United is not saying it wants to buy JetBlue. Kirby clearly framed the relationship as partnership, not merger. But it is also clear that United sees value in deepening ties with JetBlue, particularly in markets where JetBlue gives United something it does not have. That opens several possibilities.
United has long been weak and is currently absent at New York JFK while JetBlue has a major JFK presence. United has strength at Newark, but Newark is operationally fragile and politically complicated (though having its best operational year ever with reduced traffic mandated by the Federal Aviation Administration). JetBlue has struggled financially, but still has valuable assets, loyal customers, a strong brand in the Northeast, and a product that many travelers genuinely like.
You do not need a merger to see why United would want to get closer and JetBlue’s strength is more than just its JFK slots.
I chuckle that Kirby is never boring and is willing to say out loud what other airline CEOs might only whisper in private.
Concerning JetBlue, a deeper partnership could make sense, especially if it is structured in a way that does not destroy competition, especially on transcontinental routes. I think even a United-JetBlue Northeast Alliance identical to the DOJ-dismantled American-JetBlue Northeast Alliance would pass regulatory muster in this era, but United is even weaker than in the Northeast than AA was. I still think dumping United and re-creating the American-JetBlue Northeast Alliance makes the most sense for both JetBlue and American.
You can watch the interview here:
CONCLUSION
Scott Kirby says United cannot pursue a merger with American Airlines without a “willing partner,” and American has made clear it is not interested. But JetBlue is a different matter. Kirby openly said he wants United and JetBlue to get closer and do as much as possible together as partners.
That does not mean a merger is coming, but it could Kirby’s suggest the partnership could grow in other ways.
image: @scottkirby / Instagram
The plan the whole time… as seen from a mile away… in the biz, known as a ‘red herring’ or ‘anchoring’… extreme initial request, expected rejection, concession (the real goal). By anchoring the public and regulators’ expectations around a massive, industry-upending merger with American Airlines, a subsequent partnership or smaller deal with JetBlue appears minor, reasonable, and far less threatening by comparison. Hopefully independent regulators knew this from the start; however, I fear, it’s all Trump lackeys, so all of Kirby’s sucking-up will pay off in the end, if he gets it done before the Orange Man is finally gone.
Matt, interestingly, Gary at VFTW posted after you: “United CEO Refuses To Say American Airlines Merger Is Dead, And Keeps Talking Up JetBlue”… so, which is it, dead, or not dead? Huh!
Kirby still wants it. I don’t think he’s going to get it and I think he realizes it.
Ahh, so not-dead? I’m reminded of a scene from House of Gucci, 2021… “DEAD!” — Aldo Gucci (Al Pacino).
JetBlue continues to be financially fragile, while having a lot of assets and infrastructure unappealing to United. Per Kirby’s comments, JetBlue, as it currently exists, isn’t an appealing takeover target for United.
But fast forward to a JetBlue facing bankruptcy and Kirby’s play begins to make a lot of sense. Guiding a failing JetBlue into a structured bankruptcy would allow United to asset shop, taking the parts of JetBlue that are valuable to United (JFK slots, BOS slots, FLL slots, airframes, etc), while not being forced to take over their larger route structure and other questionable assets.
As JetBlue’s “partner” already, United bolster their case in the bankruptcy court.
They just need to allow for earning PQP and united club access on B6 flights and the arrangement would be perfect. Another option to NYC.
Agreed on that.
I absolutely second this.
And the next step would be inclusion in the Star Alliance.
I’m with you all on this. And add Boston to it too…..
first, it is noteworthy how much AA and UA need to rely on the hope of transactions with smaller carriers in order to fix their strategic mistakes of the past. AA tried the NEA and failed to fix AA’s inability to compete in NYC and use its slots there and is now hoping for a stronger partnership with AS to fix its west coast strategic failures while UA is trying to overcome its strategic failure in leaving JFK; AA, B6 and DL all manage to see the value in serving all 3 major NYC airports.
second, DL – which was the 6th largest airline at the time of deregulation 48 years ago – is now the largest domestic airline by RPMs and the highest revenue airline in the world. You honestly have to ask what DL managed to see and DL that AA and UA – both much bigger and more prominent at the time of deregulation – did not see and do.
second, B6 is the product of an attempt to inject low fare competition into the NYC market and, a quarter century into the experiment, hopes of LCC capacity in NYC look bleaker than ever.
NK’s failure pulled more than 5% of capacity out of EWR and LGA and fares are undoubtedly rising as a result.
third, UA can try to argue all it wants that EWR is a different market from LGA and JFK but there is clear DOJ precedent for treating all airports in a metro area from one competitive standpoint. UA loves to tout that it is the largest airline to/from NYC and yet also wants the world to believe it is disadvantaged; they can’t have both things because both are simply not true.
fourth, airfare data for May just came out and airfares increaesd by 27% in May after a 20% increase in April. Airlines are recapturing a significant portion of higher fuel – not 100% which means earnings will go down – but airfares are going up faster than other services/products.
finally, NYC is quickly becoming a duopoly in the world’s largest travel market. AA and B6 combined are smaller than DL which is itself slightfly smaller than UA. Regulators at federal and state levels will have absolutely zero appetite for allowing DL and UA to increase their size esp. in NYC given that NK has already failed and the only hope for UA to get bigger is for B6 to fail and further increase DL and UA’s shares of the market. AA and B6 are both struggling to compete in NYC so their current shares can hardly be projected into the future.
It is simply a pipe dream for UA to think it will gain any more access to NYC unless it is also willing to significantly cut the size of its operation at EWR – which it most certainly will not do.
I’m skeptical of the entire idea. Other than transcons and some hub adds, JFK does not fit with UA’s strategy—low-yield within perimeter flying will just cannibalize EWR. In fact, LGA slots are probably more valuable to UA beyond the few needed for peak hour JFK transcons, UA is not going to magically turn FLL into a high yielding hub—the money is at MIA. I agree that ultimately AA and B6 have the most to gain from each other, or maybe AS/B6 with a continued partnership with AA. Ultimately, B6 may be worth more parted out.
the hypocrisy of UA’s desire to get back into JFK w/ a limited size operation is that it has repeatedly said that AA cannot survive at ORD in second place and yet UA would be in 4th place at JFK as long as AA and B6 stick around since DL is only going to continue to grow its presence as opportunities arise None of those 3 are going to roll out the red carpet for UA.
and in in order for UA to have a chance of surviving against the competition at JFK means that one of the other 3 will have to “die” means that UA’s share of the NYC market will only go up, further solidifying the objections to any deal that gives UA any more access to NYC.
there is probably a better chance that UA could buy the scraps of FLL or AA’s MIA hub if DL chooses not to go after either of those.
Why would UA want a low rent, low yield hub in FLL Spectrum Boy? UA has the 2nd best Latin hub at IAH after AA (and for some markets like GIG, GYE, GEO, and MID the best yields) other than some Eastern Carib destinations FLL give nothing UA needs and would be a money-sink.
As for JFK, UA does not care if they are in 4th place. That is not the point. They are already #1 in NYC metro; JFK is for yields, flow, and contracts kid.
we all realize you are hate filled but do you think you can spare us your incessant insults? your discussion of the issues is always welcome.
no, DL at ATL has more ASMs to Latin America than UA at IAH.
FLL might or might not work for UA or any legacy but S. Florida is absolutely booming and FLL might be B6′ best hope. Problem is that they still have a large operation in NYC and BOS and FLL can’t ever overcome the losses they have from those operations.
Yes, it is a point that UA would be in 4th place. There isn’t a carrier in the US – or the world – that succeeds at a market where it is 4th out of 4.
and it still makes no sense that B6 would lease slots to UA so that UA can compete in B6′ best markets. Has it occurred to you or others that B6, even if it is not in bankruptcy, is going to find some way to get out of the “promise” of leasing JFK slots to UA, even if the feds allow it.
and, as I have also said before, there is a far greater chance that AA and/or DL will grow their EWR operations than that UA will succeed at starting brand new flights at JFK in the same markets where 3 other airlines – including AA and DL – are major competitors.
sit tight but dont’ be surprised if UA’s NYC plan yet again fails.
Sigh. If only Kirby wasn’t a walking ad for the desperate need for Thorazine.