In United-JetBlue, Focus on the Narrative
Yes, it is happening, a source says. And it's a very big deal, because of what it does to American. Also: a dive into JetBlue's earnings call.
Dear readers,
First things first: I have confirmed that United and JetBlue have agreed to an interline agreement1 and frequent flyer partnership, and it may be announced as soon as late this month. Reuters first reported the news.
United has similar deals with JSX, Emirates and many other airlines, and while they’re lucrative in the aggregate, each one hardly matters because they produce little revenue (in the scheme of things). This partnership pairs two domestic airlines with powerful brands and complementary networks, so it might be more material. Still, under the initial plan (which a source confirmed for me), the JetBlue-United partnership won’t do much more than allow both airlines to capture incremental customers at airports where neither is very strong. It’s also probably a precursor to United’s return to JFK, as reported by an Italian news outlet.
That’s not huge stuff. Yet I still view this is as a very significant event, though for different reasons than TD Cowen analyst Tom Fitzgerald flagged. Fitzgerald wrote this week that this partnership could be the first step in United acquiring JetBlue. “If United pulls this off,” Fitzgerald wrote of a possible merger, “we would view it as a major competitive coup.” It would be, and it could happen, though Scott Kirby continues to say that merger integrations are messy and perhaps not worth the trouble. That may be true, or it may be a misdirection.
Regardless, I think the major competitive coup actually starts right now for a very simple reason — United is about make American look stupid (yet again). Such things long have delighted United’s executives, who seem to relish making Robert Isom look overmatched, as they have in Chicago. This is that, but on steroids.2