Airline consolidation has been a big topic of conversation in recent times. We’ve recently learned that JetBlue is reportedly looking to be acquired, and we’ve even seen the Transportation Secretary talk about how “Trump loves to see big deals.”
Generally when people think of potential consolidation in the US airline industry, Delta is an airline that doesn’t even come to mind. So while we’ve heard endless comments from United CEO Scott Kirby about mergers, we’ve heard very little from Delta CEO Ed Bastian… until now.
During yesterday’s Q1 2026 Delta earnings call, Bastian was asked about how he sees the industry playing out over the coming year given the spike in oil prices, etc. Here’s how he answered:
“You have a considerable portion of the industry that has not returned its cost of capital, has not made a profit in years. Going back over the last decade when we saw consolidation happen, we forget what drove consolidation. What drove consolidation was higher fuel prices back in 2009, 2010, 2011, and we were the leaders in that with the acquisition of Northwest in 2008.”
“I anticipate higher fuel prices will cause much more significant structural reform than we’ve seen over this period. COVID, I think, was a different animal, where no one was strong enough to engage in the type of rationalization that was necessary.”
“As we look forward to building a healthier business for the future, there’s a number of business models that I think their owners are going to start questioning whether they continue to commit capital to. However that plays out, it’s going to be of benefit to Delta.”
There are three key takeaways, as I see it:
- Bastian says that the number one thing that drives consolidation is higher oil prices
- Bastian expects “significant structural reform” in the near future, based on airlines being “strong enough to engage in the type of rationalization” necessary
- Bastian says that any type of consolidation or bankruptcy will be to the benefit of Delta
I think I’m a bit surprised by the conviction with which Bastian is making these statements, assuming I’m understanding them correctly. Bastian is saying that he expects “much more significant structural reform” than during any similar past crisis?
It seems he’s suggesting consolidation rather than airlines just going out of business, based on the sentence after the above referencing how airlines now have the financial strength “to engage in the type of rationalization that was necessary.”
In terms of consolidation, it seems to me that any sort of a deal would include Frontier or JetBlue (or I suppose Breeze or Avelo, though those airlines aren’t publicly traded). So I question what kind of “significant structural reform” Bastian could be referencing?
Also, it’s of course logical for airline executives to spin everything as a positive, but I love how Bastian suggests that any and all consolidation is good for Delta. Yes, overall consolidation is good for existing players, in terms of eliminating competitors. But if we start to see Alaska, American, or United, acquiring JetBlue, then I think it’s hard to argue that will be a net positive for Delta (yes, there might be some concessions, but I don’t think they’ll be greater than the new competitive threats).
Bottom line
Delta CEO Ed Bastian has indicated that we could see significant industry consolidation in the near future, even more than we saw around 15 years ago, during the last major round of consolidation. However, he insists that any and all consolidation is good for Delta, even if the airline isn’t involved.
He’s more enthusiastic about consolidation than I would’ve expected, so I look forward to seeing how this all plays out.
What do you make of Bastian’s consolidation comments?
