Given the right partner, a potential acquisition of low-cost airline JetBlue would make financial sense and may have a better chance of clearing a government review under the current administration, an analyst with JPMorgan wrote this week.
In a note, Jamie Baker said JPMorgan believes JetBlue is more likely to be acquired than file for Chapter 11 bankruptcy protection. Baker advised watching merger and acquisition-related developments in the U.S. rail industry, which could elucidate the Trump administration’s position on large-scale mergers and consolidation in the transportation sector.
In July, Union Pacific announced plans to acquire Norfolk Southern in a cash and stock deal valued at over $250 billion. It is the largest tie-up of its kind in years, and could if approved reshape the ways goods are moved across the country.
The merger is being reviewed by the Surface Transportation Board.
“To summarize, we think there could be another round of airline consolidation under the current administration (or the next one, perhaps) depending on the outcome in the rail space,” Baker wrote.
His comments were first reported on by Seeking Alpha.
JetBlue has not been profitable on an annual basis since 2019. Its quarterly net losses and high debt load have prompted speculation that it will eventually merge with another airline to survive. A federal court blocked JetBlue’s pending acquisition of Spirit in 2024.
Earlier this year, JetBlue and United announced their “Blue Sky” partnership, which allows for reciprocity in loyalty points and rewards, revenue booking, and slot sharing at certain airports, among other forms of cooperation. Opponents of the alliance, including Spirit, have called it anticompetitive and worry that JetBlue will be reduced to a “de facto vassal of United.”
In his note, Baker said a potential United acquisition of JetBlue would give United market parity with rivals American and Delta at around 16%. A JetBlue merger with Alaska Airlines would deliver less, at 7% market share, he noted, while a linkup with Southwest would translate to 22%.
