In Part 2 of this 3-part article series aviation journalist and analyst Alex Martinez Rivera was looking at who could possibly acquire who in the Alaska and JetBlue merger scenario. Next, the author is performing an evaluation of different merger possibilities, including scenarios that include other airlines.
American Airlines, a matchmaker, or a wedding crasher?
Alaska Airlines, due to American Airlines’ help, is the Oneworld Alliance member to be at the end of the year.
So the question is revolving around whether American plays the matchmaker or not. Or, is American trying to steal the wedding?
I believe that the power-play lies with JetBlue since Alaska is on the cusp of becoming part of the Oneworld Alliance. Although stranger things have known to happen, so far the agreements with both Alaska and JetBlue are similar, but within different geographies. From a strategic standpoint American Airlines seems to be moving away from Hub and Spoke and towards Point to Point travel.
American Airlines supplies international travelers and Alaska and JetBlue (in their networks) carry those international travelers beyond Seattle, Boston, and New York without American Airlines reinvesting on its own fleet. American fends off from Delta and United in the East and Delta in the West. In the same fashion, Alaska-JetBlue get international passengers, a symbiotic relationship.
That to me is a nice corporate detente for an even start trying. In my scenario, American Airlines doesn’t play but leaves the grounds rules clear to Alaska.
“Stay independent, stay in the West, I’ll help you with international passengers, you let me use Seattle as a hub and you get the calvary.”
Alaska and JetBlue Merger or acquisition scenarios with other airlines
Can another airline come in and take either Alaska or JetBlue in a merger?
That’s the billion-dollar question. If it wasn’t for COVID-19 I would have say to you:
“Not in a million years.”
However, time goes by and sands shift with time. Things aren’t as strong as they need to.
It becomes a game of who has the better cash flow, who is stronger and who can last the longest.
Which airline can last the longest?
Delta Air Lines
I know it is Delta Airlines, but through the Northwest merger they got Seattle so they don’t need a fight with the Department of Justice.
American Airlines certainly has a “buffet” of choices. However, according to Barrons, its debt load is heavy. American would require a financial instrumentality to take part in that debt.
United Airlines’ debt load is in better shape. However, it isn’t by much as the difference is by $10 billion. Furthermore, the caution from CEO Kirby on cutting flights might be too much. One can add that having a hub in Seattle for United doesn’t make sense.
Southwest is my favorite candidate. However, in all of the three airlines Alaska, JetBlue, and Southwest, there is a company culture mismatch.
Is who buys who important?
Who buys who is the least of my worries.
Alaska and JetBlue is my most compelling evidence of a risk compliance merger made in heaven.
I am sticking to my scenario.
What do you think about the merger possibilities of Alaska and JetBlue or the possible merger scenarios with other airlines? You can contact Alex Martinez Rivera here.
Featured Image: JetBlue.