Could United Buy JetBlue? A Rumor With An Interesting Denial

Yesterday I first wrote about the rumor that United might be interested in JetBlue, in some form or another. I can’t personally vouch for this, but it makes for an interesting theoretical discussion. I want to provide an update, as United has made a regulatory filing regarding this, and I’m not actually sure it’s much of a denial?

United reportedly interested in JetBlue

@xJonNYC is known for breaking a lot of news in the airline industry, and in recent days, he has shared a very interesting rumor. Specifically, he writes about how United is reportedly interested in JetBlue, either in the form of a merger, or buying assets, or something.

He’s not sure what exactly this would look like, but he’s confident that this is being analyzed internally, and even that some of United’s Star Alliance partners (presumably those with which the airline has a joint venture) have been briefed about this topic, given how it could impact partnerships.

I have sources telling me UA is heavily looking at B6 — merger or buying assets or something else I’m not remotely sure at the moment.— JonNYC (@xjonnyc.bsky.social) January 29, 2025 at 2:38 PM

so, as the hours tick by one looks for evidence to two things: 1. is the rumor credible (as in not just idle gossip or people just passing along low-level chatter,) and 2. what is the likelihood that something will happen along the lines of the rumor. On point 2…— JonNYC (@xjonnyc.bsky.social) January 29, 2025 at 8:49 PM

…I have no additional inkling or indication in any way as to if anything like this is considered likely to happen. On point 1, however, I now have a great deal of confidence that this rumor is completely solid.— JonNYC (@xjonnyc.bsky.social) January 29, 2025 at 8:49 PM

obviously the world's focus will be very much elsewhere for a while, just noting that it's my belief there may actually be a bit more oozing out about this (UA's interest in B6.) And kindly note at no time do I indicate that B6 is expressing this interest– this is all from UA's..— JonNYC (@xjonnyc.bsky.social) January 30, 2025 at 12:26 PM

.. perspective (at least that's the extent of my knowledge on the subject anyway)— JonNYC (@xjonnyc.bsky.social) January 30, 2025 at 12:27 PM

So again, the emphasis is on this being a rumor, and it’s anyone’s guess to what extent this materializes, if at all. After all, it could be that these discussions are happening internally, but don’t go beyond that. Furthermore, it’s even stated that the goal might be something other than a merger, though we don’t know what that would look like.

What United says about potential merger activity

Yesterday, United filed an SEC 8-K regarding the rumors, with the full statement reading as follows:

It has come to the Company’s attention that there may be rumors spreading among certain of our investors regarding United’s involvement in a potential strategic transaction with another airline. The Company is not in negotiations or discussions with any other airline regarding a merger, acquisition or similar strategic transaction and has not been in any recent discussions with any airlines regarding the same. As indicated by United’s strong earnings results and outlook provided on January 21, 2025, the Company has great momentum and a bright future ahead.

Interestingly, I wouldn’t actually consider this to be much of a denial of any rumor. United states that it’s not in discussions or negotiations with another airline. The rumor was never that there were discussions between airlines, but rather that an analysis was happening internally.

So I find it noteworthy how seriously United is taking this, though at the same time, it’s not actually a denial of what had been rumored.

JetBlue would be a great fit for United

JetBlue is an airline that’s generally loved by passengers. There’s only one major issue — the airline struggles to make money (minor detail, I know!). Unlike some low cost carriers, JetBlue isn’t hemorrhaging money. However, the airline struggles to even consistently break even, despite having a strong market position in some major airports.

Several months ago, I wrote about how JetBlue could be an attractive acquisition target for several airlines. Specific to the United rumor, I can totally see how United would find value in acquiring JetBlue:

• We know that United has desperately been wanting to return to New York (JFK), but can’t get available gate space; JetBlue has a huge presence there
• We know that United has been looking closely at opening a hub in Florida, and JetBlue has a hub in Fort Lauderdale (FLL)
• JetBlue and United have largely complementary fleets, as JetBlue primarily has Airbus A320-family aircraft, which United also has; I’m sure United also wouldn’t mind adding Airbus A220s to its fleet, as they’re lovely planes

United as an airline is very much trending upwards. Not only is United now the world’s largest airline, but it’s increasingly in Delta’s league when it comes to profitability. There’s no denying that a JetBlue acquisition would not only help United become even more dominant in terms of size, but also give it access to the two markets it’s most hoping to expand to (JFK and Florida).

Now, I think it goes without saying that American would probably also be mighty interested in acquiring JetBlue, given that the two airlines had a Northeast Alliance, which was ultimately blocked by regulators under the Biden administration. JetBlue could greatly help American in both New York (JFK) and Boston (BOS).

However, given the respective financial performance of United and American, I suspect the former would be in more of a position to win in any bidding war.

Would this deal get regulatory approval, though?

Of course a logical question would be whether an airline like United acquiring JetBlue would get regulatory approval. Under the Biden administration, we saw JetBlue try to acquire Spirit, only for the Department of Justice to block that, arguing it was important to maintain ultra low cost carrier competition.

I thought that was the wrong decision — in the meantime, Spirit has upended its business model, filed for Chapter 11 bankruptcy, and it’s anyone’s guess what the carrier’s future holds.

Of course I think it’s safe to say that the Trump administration will take a different approach to consolidation than the Biden administration did. Would this deal get approved? I mean, that goes beyond my area of expertise, though personally I wouldn’t be surprised if it were allowed…

That being said, call it a hot take, but I’m not sure more industry consolidation is a bad thing. And I’m not even sure United acquiring JetBlue would be bad for consumers. Why? Well, simply put, an airline can only afford to have tickets subsidized by shareholders for so long before something needs to change.

Specific to United acquiring JetBlue, let’s think about this for a second:

• This would be massively positive for JetBlue employees, who would be getting major pay increases, to align with United’s pay scales
• I’d argue that having a second major global airline with a hub in South Florida would be good news for consumers
• This would be great news for competition in New York City; currently Delta and American have a much bigger presence at Kennedy and LaGuardia, so it would be great to get a more third player there
• United is simply in a much better position to leverage JetBlue’s assets to turn a profit, especially given that airlines largely make money through their loyalty programs nowadays, and don’t actually earn that much flying passengers
• Fundamentally what’s important is that the airline industry maintains and grows capacity, and keeping airlines not making money alive doesn’t do a whole lot to forward that goal; I mean, just look at all the new aircraft deliveries that JetBlue has deferred

If United were to acquire JetBlue, I suspect it would be similar to Alaska acquiring Hawaiian, where the Hawaiian operation would go from money-losing to almost profitable overnight, due to simply better utilizing assets.

I think the reality that some people refuse to accept is that US airline tickets are essentially subsidized by credit card agreements. Even the most profitable airlines (Delta and United) have virtually non-existent margins if we’re going to compare passenger revenue per available seat mile to cost per available seat mile. Large airlines have the power to offer much more lucrative loyalty programs, because there’s power in scale.

Bottom line

We’ll see if anything comes of this, but rumor has it that United is interested in JetBlue, in some form or another. This could be anything from a merger to a slot deal. I’m not surprised that United has this interest, given that the current management team wants to return to JFK Airport and open a hub in Florida, and both of those are areas where JetBlue could help a lot.

Now, if anything actually comes of this is a different story, but in the meantime, we’ll mark this as “developing,” and I figure it makes for an interesting aviation geek discussion. It’s worth noting that United has issued a statement denying that discussions or negotiations are taking place with other airlines, but no one ever claimed they were — the claim is that these discussions are happening internally, for now.

What do you make of the prospect of United investing in JetBlue?