A year after a judge blocked JetBlue’s merger with Spirit Airlines, the only major airline based in New York City is struggling against headwinds in the ultra-competitive world of budget air travel. Analysts say the carrier, which has seen its shares plummet to under $7 per share, will likely need some sort of airline partnership to help it course correct.
Last year all three major ratings agencies downgraded the Queens-based airline’s credit after it announced plans to issue $3 billion in debt, following its failed merger. In the months since, the carrier has leaned into its footprint in the Northeast, adding new routes like daily flights from John F. Kennedy International Airport to Washington D.C., Detroit and Pittsburgh, plans to open new lounges in New York and Boston this year, and expects to launch new premium seating. Aviation analysts are encouraged by the changes but worry it could take years to pay off.
The trouble for JetBlue is that it offers a higher-end flight experience than other low-cost competitors, like Spirit, Frontier or Breeze, but it can’t profitably sell seats that match their low prices, say aviation observers. That puts the carrier in the tricky spot of competing for budget customers while also vying for more premium fliers, against juggernauts like United, Delta and American that have robust loyalty programs to keep fliers coming back.
“The company lives in a sort of difficult space, I’d say,” said George Ferguson, senior aerospace, defense and airline analyst for Bloomberg Intelligence. “JetBlue, if they want to fill out their product offering, they can’t do that overnight; they need another airline to help it.”
The question: Which partner makes the most sense? A few possibilities:
American Airlines
The ideal partner with JetBlue is probably American Airlines, which it first partnered with in 2021 through what was known as the Northeast Alliance. The joint venture allowed the two carriers to coordinate flights and pool revenue, and was mostly seen as a success. That was until May 2023, when the Justice Department under President Biden got a federal judge to shut it down, ruling that the partnership hurt competition and raised fares.
With a new president in the Oval Office, JetBlue may have a chance to revive the alliance, or a similar deal with another airline, Ferguson predicted. The judge’s 2023 ruling spelled out a roadmap for what an American Airlines partnership could look like without violating antitrust rules, and at an aviation conference last week, JetBlue CEO Marty St. George said that gives him hope.
“Frankly, when I look at the benefits that we got for the partnership we had, I think that’s something that’s attractive for us,” said St. George. “We have said we’re talking to multiple airlines. We’re still talking, we will, if we find a deal that’s attractive, we’ll absolutely do it.”
American Airlines declined to say whether the carrier is in talks with JetBlue to rebuild a partnership, but directed Crain’s to a comment made by the company’s CEO Robert Isom, at a recent aviation forum: “We’re not done yet figuring out how to best serve our customers,” he said. “That doesn’t stop us from going out and taking a look at the marketplace.”
Southwest Airlines
Recently, chatter among union airline workers has spurred rumors of merger talks between Southwest and JetBlue. A merger with the Dallas-based airline could complement JetBlue’s routes, since Southwest serves mainly the West Coast, the Southeast and the Caribbean. JetBlue’s leadership has acknowledged that it must grow to survive, and a Southwest merger could be one way to do that.
Southwest, though, relies on a uniform fleet of Boeing aircraft to keep maintenance and costs down, and merging with JetBlue would mean embracing the carrier’s Airbus models. Aviation observers say the difference in fleets could complicate things and require new training to get pilots and other workers up to speed on handling the aircraft. The merger itself would create a combined entity worth more than $20 billion, and likely would face fierce regulatory hurdles because of the possibility it could reduce competition and lead to higher airfares for consumers.
“There could be some sort of partnership, but anything structural, their products are very different,” said Michael Boyd, president and CEO of the Boyd Group International, an aviation research firm and consultant. “Their systems are very different. The clientele that they’re after is very different.”
Southwest flatly denied merger rumors to Crain’s, while JetBlue declined to comment.
Alaska Airlines
JetBlue has long hoped to expand with the Washington state-based Alaska Airlines, and now could be the right time to initiate those talks. In 2023, court papers revealed that JetBlue had once had its eyes on buying Alaska Airlines to turbocharge its growth and allow it to better compete with the country’s four largest carriers — American, Delta, United and Southwest. With both the Spirit merger and the American alliance falling apart, some industry observers speculate that JetBlue could revive its Alaska ambitions.
But Alaska’s recent deal to acquire Hawaiian Airlines could complicate matters. Cameron Greenberg, a spokesperson for the airline, said the company is “solely focused” on its integration with Hawaiian and “have no plans for another acquisition or partnership with JetBlue.” JetBlue declined to say if it has approached Alaska with merger aspirations.
Such a partnership “isn’t off the table” said Boyd, the industry consultant, but the timing is unlikely to be soon given that Alaska is in the process of absorbing Hawaiian.
Ferguson pointed again to the problem of different fleet types. “Both Alaska and Southwest benefit from a single fleet type, and so I think muddying it with a JetBlue Airbus fleet takes away some of the magic that makes a low cost airline,” said Ferguson. “So, I continue to see JetBlue operating in a pretty challenged environment.”
