Dear JetBlue,
Please get yourself together.
Sincerely, Joe & Sharon from Your Mileage May Vary
Since we live in Orlando, Sharon and I are interested in JetBlue remaining a viable airline. They offer flights to many New York airports we like to visit, including JFK and Newark. They’re also the main airline in Orlando Airport’s newly opened Terminal C, and if anything happens to the airline, it will significantly impact our home airport.
Failed Merger Plans
In the convoluted world of corporate mergers, JetBlue has been involved in one of the most confusing merger talks over the past years:
- Spirit bids to purchase Frontier
- JetBlue offers to buy Spirit
- Spirit and Frontier abandon merger talks
- JetBlue and Spirit signed a merger agreement
- Federal Judge blocks JetBlue and Spirit merger on antitrust concerns
So we’re back where we started, with three airlines competing against each other. Two of them use the ultra-low-cost model, and one positions itself as offering an improved base service over some of the legacy carriers. None of them can make a significant profit, with higher-than-ever demand for domestic flights.
JetBlue Tries The Legacy Carrier Method To Raise Cash
Delta Air Lines procured a $6.5 billion loan, utilizing its SkyMiles program as collateral. Similarly, United utilized its MileagePlus program to secure $5 billion in credit. JetBlue is currently seeking to collateralize its TrueBlue program for $2.75 billion in loans. However, unlike the established carriers, this action directly impacted JetBlue’s stock, leading to a 20% decline in a single day of trading.
JetBlue may secure the necessary funding to sustain its operations; however, the terms of the loans appear less favorable compared to those obtained by Delta and United. The airline is expected to demonstrate a viable plan for achieving profitability, whether through its flying operations or loyalty program, in order to attract and retain investor support. Without a clear path to profitability, JetBlue may continue to experience challenges in securing investment.
Recap
The turbulent journey of JetBlue has involved failed merger plans, financial struggles, and attempts to raise capital. With mergers falling through and challenges in securing investment, the airline faces uncertainties about its future profitability. JetBlue’s efforts to collateralize its loyalty program for loans have also impacted its stock, highlighting the challenges it faces in the competitive airline industry.
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