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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?
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