AA and JetBlue?

[StraaightTaalk]

Has anybody else here in NY been hearing the increasing rumors about AA acquiring Jetblue? I know that these kinds of rumors are always around, but this one keeps picking up steam.

I can see this scenario having several advantages and disadvantages:

Advantages:

1. Jetblue Airbus fleet would very nicely replace the aging MD80s.
2. The majority of Jetblue's workforce was hired after 2001, so seniority issues with pilots and flight attendants would be minimal for the AA group as most of Jetblue was hired after the last AA hiring wave and subsequent furloughs. Obviously, the Jetblue group would not be pleased even with DOH, however, since DOH would still put them at the bottom of the AA list.
3. The lease on the new terminal could be sold at a good price to another airline in desperate need of new facilities at JFK, ie Delta.
4. Elimination of competition at JFK.


Disadvantages:
1. Taking on more debt.
2. Jetblue poison pill requiring the acquirer to pay wages to furloughed employees who lose their job in an acquisition.
3. Impending slot restrictions at JFK.
4. The Luthansa and Star Alliance involvement.



I am sure there are more advantages and disadvantages, but as much as I do not like listening to rumors, I keep hearing this one over and over lately here in NY.

 

[ual777fan]

Has anybody else here in NY been hearing the increasing rumors about AA acquiring Jetblue? I know that these kinds of rumors are always around, but this one keeps picking up steam.

I can see this scenario having several advantages and disadvantages:

Advantages:

1. Jetblue Airbus fleet would very nicely replace the aging MD80s.
2. The majority of Jetblue's workforce was hired after 2001, so seniority issues with pilots and flight attendants would be minimal for the AA group as most of Jetblue was hired after the last AA hiring wave and subsequent furloughs. Obviously, the Jetblue group would not be pleased even with DOH, however, since DOH would still put them at the bottom of the AA list.
3. The lease on the new terminal could be sold at a good price to another airline in desperate need of new facilities at JFK, ie Delta.
4. Elimination of competition at JFK.


Disadvantages:
1. Taking on more debt.
2. Jetblue poison pill requiring the acquirer to pay wages to furloughed employees who lose their job in an acquisition.
3. Impending slot restrictions at JFK.
4. The Luthansa and Star Alliance involvement.



I am sure there are more advantages and disadvantages, but as much as I do not like listening to rumors, I keep hearing this one over and over lately here in NY.

If this were to happen I would hope that AA would keep the JFK terminal and use it as their domestic terminal for JFK service. Buying JetBlue would give AA an instant feeder base for their expanding European service from JFK. I would sincerely hope that AA wouldn't just buy JetBlue and then pull the plug. This would finally give them the opportunity to be able to dramatically expand their NY presence and consolidate it at JFK; allowing people to connect through NYC without having to lug it from LaGuardia (the 7th circle of hell) to JFK. Keeping both would finally allow for someone other than Continental to have a true hub serving the NY metropolitan area.

 

[FWAAA]

I'd rather see B6 simply go out of business; that would benefit AA tremendously without having to spend money to buy it.

If AA bought B6, one big plus would be all the JFK slots that would be obtained.

 

[ual777fan]

I'd rather see B6 simply go out of business; that would benefit AA tremendously without having to spend money to buy it.

If AA bought B6, one big plus would be all the JFK slots that would be obtained.

And that brand new 30-gate terminal...

Oh, and one more thing... They would also get all those E190's plus JetBlue's orders (which could probably be converted to E170's for Eagle) which would nicely fill the large seat gap that AA current has in its fleet between the CRJ7's and the MD80.

Furthermore with a marketcap of just $1.1 Billion dollars it cost just about as much as AA's new JFK terminal.

The problem with this merger is about 50% of B6's revenue comes from the Snowbird runs which yield extremely poorly. If AA does take over B6 I would predict a major capacity redeployment from Florida to the west coast, midwest and south away from Florida.

 

[LGA Fleet Service]

AA & B6? Never happen.

Impose AA's existing cost structure over B6's network and *poof*...

 

[ual777fan]

AA & B6? Never happen.

Impose AA's existing cost structure over B6's network and *poof*...

That's a possibility. Although since the B6 employees would be sitting at the bottom of the AA pay scales (both in terms of aircraft and seniority) if there are increases, they probably wouldn't be that significant. Remember JetBlue has been trying to keep the unions out and you don't do that by offering substantially less pay and fewer benefits than your unionized companions at other airlines.

Furthermore, JetBlue has a ton of orders in for E190's (some of which could be converted to E170's for Eagle) which would fill the 80-120 seat hole that was left in when the F100's were retired and the 717's were dumped.

If you changed the capacity mix, moving metal away from JFK-FLA to JFK- transcon/midwest you could improve yields further reducing the burden of AA's higher cost structure.

Just some things to think about...

 

[eolesen]

Ain't gonna happen, folks.

Lufthansa wants the feed at JFK for Star Alliance. That's why they invested in JBLU.

Aer Lingus just inked a codeshare agreement with both B6 and UA, so maybe AA wants to play the role of spoiler, but Lufthansa has much deeper pockets, and a merger with UA would give UA the consolidation it's been seeking for so long, a real presence in the Northeast, and then Star would be in a position to perhaps jettison US Airways...

Or, US Airways could acquire Jetblue and Frontier, get itself an even bigger presence in the US plus the DEN hub, and then Star would be able to jettison United...

 

[ual777fan]

Ain't gonna happen, folks.

Lufthansa wants the feed at JFK for Star Alliance. That's why they invested in JBLU.

Aer Lingus just inked a codeshare agreement with both B6 and UA, so maybe AA wants to play the role of spoiler, but Lufthansa has much deeper pockets, and a merger with UA would give UA the consolidation it's been seeking for so long, a real presence in the Northeast, and then Star would be in a position to perhaps jettison US Airways...

Or, US Airways could acquire Jetblue and Frontier, get itself an even bigger presence in the US plus the DEN hub, and then Star would be able to jettison United...

It's a crazy crazy world out there... that's for sure. I'm sure Lufthansa is going to want to keep B6 independent, although I'm wondering how crazy people will be to connect from a full service carrier, to an LCC. As for UA merging with B6, that's also a possibility. I see some significant antitrust issues with any US/B6 combo and I doubt UA would be happy with any US/Frontier combo. Furthermore, with the mess US is right now, I can't see them even attempting another major purchase when they still can't integrate US/AWA 3 years later.

AA could play the role of spoiler in any B6 deal, because I doubt they would like for UA or anyone for that matter, to get their hands on that many JFK slots. Same goes for NW, where AA could play spoiler in a move for their Pacific route network.

 

[nbmcg01]

It's a crazy crazy world out there... that's for sure. I'm sure Lufthansa is going to want to keep B6 independent, although I'm wondering how crazy people will be to connect from a full service carrier, to an LCC. As for UA merging with B6, that's also a possibility. I see some significant antitrust issues with any US/B6 combo and I doubt UA would be happy with any US/Frontier combo. Furthermore, with the mess US is right now, I can't see them even attempting another major purchase when they still can't integrate US/AWA 3 years later.

AA could play the role of spoiler in any B6 deal, because I doubt they would like for UA or anyone for that matter, to get their hands on that many JFK slots. Same goes for NW, where AA could play spoiler in a move for their Pacific route network.

And AA thought TWA wouldn't fit into their corporate culture....lol

 

[Barfbag]

That's all craziness, but if anything does occur, well then the entire merged fleet should return to red and white colors and fly out of T5, just like old times.

 

[ual777fan]

I think AA might just do it for the JFK slots, the terminal and the EJets. The A320's are a nice plane and a nice bonus provided they want them, if not, lots of people would be very happy to take them off of their hands.

 

[LGA Fleet Service]

The A320's are a nice plane and a nice bonus provided they want them, if not, lots of people would be very happy to take them off of their hands.

AA is always glad to help another airline out with a fleet renewal program, see the TWA 717's for example.We couldn't wait to get rid of them, and Air Tran was more than happy to take quite a few of them.

 

[whlinder]

Or, US Airways could acquire Jetblue and Frontier, get itself an even bigger presence in the US plus the DEN hub, and then Star would be able to jettison United...

While I don't think anything is off the table at this point in time, IMHO UA would have to be broken up or be the "acquired" airline in order to leave Star. They've got the LH anti-trust immunity and "founding member" status in the alliance. I don't know what the process is for Star to vote UA off the island but I can't imagine UA going quietly, even if LH runs the alliance.

 

[Hopeful]

That's all craziness, but if anything does occur, well then the entire merged fleet should return to red and white colors and fly out of T5, just like old times.

right, so they can file for bankruptcy yet again

 

[ual777fan]

AA'ers and TWA'ers remember to play nice! I don't want this thread shut.