United Airlines CEO Scott Kirby is a very smart, but increasingly strange and unpredictable, leader. He does a great job propelling his airline in the right direction, but I feel like he’s saying more and more things that make you scratch your head, and make you wonder if he is just getting a bit of a God complex, or whether he’s trolling, gaslighting, or what not. Here’s the latest example of that.
Kirby not interested in consolidation for United
Several weeks ago, we learned how Kirby reportedly approached President Trump about the concept of United buying American. We know Kirby has spent a lot of time sucking up to the Trump administration, and that Trump might be less opposed to consolidation than Biden was, for example.
However, the level of damage such consolidation would do to aviation in the United States is unthinkable. Nonetheless, Kirby even publicly made his case, using some highly questionable, patriotic “trade deficit” argument (which I guess might resonate with Trump, but otherwise isn’t very sound logic).
Many of us wondered if this was all some sort of a foot in the door approach to get approval for a deal for United to acquire JetBlue. After all, that’s something that has been suggested for a very long time, and there have been questions about the odds of that getting regulatory approval. With Spirit having recently liquidated, I’d argue there has never been a better time for that approval to be likely.
That brings us to the latest update, based on comments made by Kirby at a Bernstein investor conference today. Kirby claimed that he believed the only transaction that would make sense would be a deal with American, and that’s something American isn’t down for (since management at the airline doesn’t think such a deal would get approval).
Kirby said “I don’t think that United at least is going to participate in any consolidation for any time I can see in the foreseeable future.” Furthermore, when the concept was brought up of wondering if the American deal was just a ruse to try to get approval for the JetBlue deal, he called that “idiotic,” and said “the last thing I’m gonna do is buy a route network that loses money” (thanks to Will Guisbond at The Air Current for reporting this).
Is Kirby trolling, playing coy, or was there a change of heart?
United and JetBlue have the “Blue Sky” partnership, whereby the two airlines are cooperating with one another when it comes to an interline agreement, a loyalty collaboration, etc. We know United’s ultimate goal is to return to New York Kennedy (JFK), and Kirby views JetBlue as a key part of that goal.
What’s so strange here is that over the past couple of years, United executives have made comment after comment suggesting that they’d be interested in a merger with JetBlue, if they thought it could get regulatory approval, and if JetBlue was down. Heck, a little over a year ago, Kirby even stated that “the ball is going to be in JetBlue’s court” when it comes to consolidation.
So to basically see him now say “pssssh, as if we’d be interested in a deal with a money losing airline” is a very odd statement to make. It’s one thing if his argument was “well, JetBlue has almost $8 billion in debt, and that’s going to be very costly to service, if we have a deal.”
But honestly, his argument is rather unsophisticated, if you ask me. That’s why I’m suspicious as to whether Kirby is actually being sincere in what he’s saying, or if he’s playing a game. Seriously, a smart airline executive is really going to just view JetBlue as “a route network that loses money?”
The reality is that JetBlue’s network could be profitable within a very short period of time if it were properly run, and part of a larger operation:
- Credit card revenue would be much bigger if it were part of the United network
- JetBlue desperately needs to add premium cabins on all flights, which is something that’s happening, and should help with revenue
- If JetBlue were part of Star Alliance and operated as part of the transatlantic joint venture, there would be so much connectivity potential at JFK, given the number of foreign Star Alliance airlines
Anyway, I don’t know what to think here, other than that Kirby is becoming an increasingly less reliable narrator on the industry. Again, that’s not to dismiss his intelligence and the great job he’s doing running United, but it’s hard to take statements too seriously from someone who swings from one extreme to the other so quickly, without even being willing to ackwowledge those shifts.
One certainly wonders what this means for JetBlue. The airline is inching closer to Chapter 11 bankruptcy, as it hasn’t turned a profit in seven years, continues to lose money, and has a debt level that’s becoming hard to service. Even if the airline can improve its operating margins, it still makes it hard to continue without some sort of a reorganization.
We know JetBlue was exploring merger opportunities with several airlines, so it’ll be interesting to see what comes of that. Alaska could be a good fit, it just seems too soon, given that the Hawaiian integration is ongoing. A Southwest deal makes no sense to me. Meanwhile I think an American deal actually has the most upside, but the issue is that American is also in the weakest financial situation among potential partners.
Bottom line
United CEO Scott Kirby is now claiming that the airline has no interest in consolidation, and certainly not with JetBlue, because the last thing Kirby is going to do is “buy a route network that loses money.” Kirby’s messaging is unbelievably inconsistent, so I don’t even know what to make of this.
Is Kirby serious now, or is he bluffing, in hopes of driving down JetBlue’s stock price? And if he is serious, why doesn’t he at least acknowledge how his perspective on this has changed over time? He’s almost acting as if he doesn’t understand how anyone could possibly think that a United and JetBlue deal might be under consideration.
What do you make of Kirby’s latest JetBlue comments?
