Rumors swirled this week that United Airlines is considering a merger, acquisition, or asset purchase from JetBlue Airways. They should be looking elsewhere.
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United-JetBlue Mergers Formally Dispelled
Earlier this week rumors that United Airlines executives were considering an acquisition of/merger with JetBlue Airways swirled around the industry forums. Matthew wrote about it with some interesting takes and if you haven’t read that yet, I recommend doing so. In fact, he suggested it in 2017, oracle that he is. It gained enough steam that United had to denounce the mere contemplation of uniting with JetBlue using an SEC filing to send the message loud and clear to investors.
An acquisition of JetBlue would make the airline the largest in the world with a healthy margin, maintain its position for premium customers, expand its footprint, and grow in places where it could make a considerable impact on the global market. The planes and staff that service them would also help the carrier through this period of prolonged manufacturer delay and engine issue.
But, of course, they aren’t doing any of that so the day dream can stop right there.
But What About The Assets?
However, part of the rumor was that it was also considering an asset purchase and this makes far more sense… just not JetBlue for a few reasons. JetBlue’s fleet, at least the fleet it would be most likely to part with, is old. It wouldn’t make sense to let go of the new A321-LR or NEOs that are helping the carrier build its European network despite its struggles to gain a foothold on the continent. That’s part of the future JetBlue is building for itself along with lounges and its new premium credit card. The A220 fleet doesn’t fit into the current United lineup, at least not right now. The (193) A320/321s would provide a huge lift to United’s fleet (in whole or in part) but the average age of JetBlue’s A320 fleet (the lion’s share of the assets) is 18.6 years of a 20-year lifecycle. They can get away with extending that some, but many are tired.
If only there was a carrier looking for a merger or acquisition partner with a fleet of relatively new A320 and A321s or better yet, an asset sale.
I’m well aware I’ve been banging the drum for Spirit to find a partner for awhile, but how is there a more perfect situation than this one? The average age of Spirit’s all-Airbus fleet is 6.9 years, a third of JetBlue’s. Spirit is in a compromised position, not compromised enough to accept an offer from Frontier for which they stated they’d rather emerge bankruptcy on their on than take, but an asset sale could be different. Oh, and Spirit has 189 aircraft that fit the bill, nearly the same size as JetBlue.
United wouldn’t buy JetBlue assets and keep them as they were, they would refit to make them United and refit with the brand. That’s not different than what would happen with any other asset they purchase, including Spirit’s. And while I’m not quite as forward thinking as Matthew (who is?), I did suggest some months ago that both Frontier and United would be a good fit for Spirit for very different reasons.
JetBlue would no doubt be far more expensive than Spirit for a variety of reasons, but both are viable options for United if it’s looking for expansion opportunities and fleet renewal ahead of the manufacturer delivery schedule.
Conclusion
If United were looking at a merger with or acquisition of JetBlue, that could make sense given JetBlue’s product, culture, and alignment. But United has said it’s not in an emphatic way. Unless it’s looking to use Delta’s model of picking up cheap equipment late in the lifecycle, it’s Spirit United should be looking at not JetBlue.
What do you think?
United is too big at the moment to suck up Spirit, nor JetBlue. Even with the current crazy shenanigans in the White House, the DOT & DOJ will push back.
Both B6 and NK need dance partners, and soon. NK should entertain the advances from Frontier or declare Chapter 7 and get it over with. Then United could buy some of the airframes.
With the development of Terminal 5 at JFK, B6 may want to accept some capital from a foreign carrier and provide domestic interline service in return.
He suggested it in 2017, oracle that he is. Quite an oracle, eight years later and hasn’t happened yet…
Lol
Early speculation Last Week had WN&B6 actively talking about a merger but those were squashed rather quickly.
Soon rose the talk of B6&UA becoming domestic partners NOT a merger with jetBlue . B6 would sell 20 slots and a long term lease of 2 gates at T6 . B6 would also be Joining the Star alliance and doing A Connections only Code share agreement at several HUBS and remaining independent on overlapping routes. JetBlue joining The Star Alliance would generate a significant amount of additional revenue from credit card synergies. This would be the best move for both parties involved.
But UA doing an outright acquisition of Spirit Airlines would also be a possibility. Allowing UA to establish a South Florida FLL Hub to compete against a weakened American Airline who’s make several missteps since the Covid pandemic. Smaller benefit UA would grab a a few more Slots at LGA plus a significant chunk of the LAS market share should they decide to keep it. Personally I think they would eliminate the NK LAS operations and focus just on building Mini Hub in FLL.
Another B6 rumor has Breeze merging with JetBlue adding David as the Chairman of Board. Breeze would obviously forgo most of its odd ball flight schedule and low margin destinations to use the A220 fleet and order book bolsters B6 leisure network.
The Hawaiian JetBlue codeshare agreement could be further enhanced to add AlaskaAir to the network.
Building towards a Long Range merger plan of the entire organisation’s in 2027.
This.
The *A/T6 deal feels like the only one of the scenarios discussed here that would likely pass regulatory muster. UA would (and probably could reasonably) argue that the deal enhances competition in the NYC market by (a) strengthening B6 compared to DL/AA (without significantly strengthening UA), and increases competition on the key JFK-LAX/SFO routes by allowing UA back in.
United seems to favor Boeing narrowbodies over Airbus products. So acquiring an all-Airbus airline seems to run counter to that bias. If United is looking for older aircraft to give it a quick infusion of lift while it waits for its new aircraft to be delivered, that could make sense. But this is sheer speculation as I’ve never been an airline CEO.
@DesertGhost – I’m not sure I agree that United prefers Boeing narrowbodies over Airbus. https://simpleflying.com/united-airlines-inks-deal-40-airbus-a321neos/
United is still flying A320s that were delivered in 1994, they would probably be ok with jet blue’s fleet of which the oldest aircraft is 6 years newer than that
JetBlue selling assets would basically be selling their lifeblood. If they sold only a small portion of their gates and landing slots it wouldn’t be enough to make a dent in their problems and if they sold a lot then that would pretty much kill JetBlue in a matter of months. Besides the problems for JetBlue if they sold out to United that would effectively create a duopoly of airlines in the New York area which would be catastrophically bad for consumers.
What JetBlue should do is approach Alaska about a merger. The benefits are pretty apparent:
Merge East Coast and West coast strengths.
Create an airline large enough to be competitive against the Big 3.
Alaska management knows how to run a consistently profitable airline.
Alaska has shown strength in engendering loyalty in passengers.
The only major drawback that I can see offhand is that they have completely different fleets.
Totally agreed. No way UA and B6 would be approved. AS is far more complimentary to B6.
UA & B6’s routes are highly complementary in nature. A marketing and code-sharing agreement between the two would would be mutually beneficial to both, boosting UA’s business traffic in BOS, LGA & JFK (where it’s currently irrelevant) and a significantly larger presence in Fla. B6 on the other hand could gain a much bigger passenger feed from the Midwest thru DEN, IAH & ORD & the LA-SFO corridor. An AA/B6 combination could only further boost AA’s already large presence in LGA/JFK, BOS, DCA & PHL.
You miss the biggest thing United wants, that JetBlue has, and Spirit does not… a prime JFK slot portfolio.
Jetblue also owns some slots at DCA and LGA airports. If B6 is willing to sell some, UA could acquire them, to start new services using UA metals, or to use the slots as bargaining chips for JFK slots or airport gates.
The problem with Spirit is #1 the galley is set up and no ovens, etc… #2 The issue that only 3 planes have brake fans. It’s going to cost a fortune to convert the planes to United specifications. As Kerby said before, it would cost to much.
It makes more sense for someone like SWA to buy Spirit who doesn’t need the galley changes. They just need brake fans.. BUT SWA would probably be better buying someone with A220’s like Breeze if they are going multi fleet as they need smaller efficient aircraft.
Southwest doesn’t have brake fans on any of their aircraft. They don’t even have brake temperature indicators.
Why would Southwest need brake fans on their hypothetical Airbus fleet?