Originally Posted by
MusicPilot
Jet Blue doesn’t have a contract and doesn’t have scope. They’re right for the picking. Only problem will be their debt. They are identical to Alaska, with the exception of planes.
From Joe DeNardi in January, 2018:
Most titillating tidbit we read this week on JetBlue came from Joe DeNardi with Stifel Nicolaus and Co.:
Balance Sheet Nearing Fortress Status
JBLU ended the year with on balance sheet debt of $1.2B plus ~$700m in capitalized rent for total adjusted debt of $1.9B and adjusted net debt of $1.2B. That's less than 1x adjusted net debt to EBITDAR giving JBLU the best balance sheet behind Southwest. To think that the balance sheet has gotten to this point by accident is silly, and the company could have used it to buyback stock long ago - clearly, it has more ambitious plans for it which likely include M&A.
We view the likelihood that JBLU targets a ULCC for consolidation as less likely than Hawaiian. All potential deals for JetBlue come with their own bit of messiness, but Hawaiian makes the most sense strategically, in our view. We'd expect JBLU to wait for improved visibility into how much margin compression higher growth from United this year and Southwest's entrance next year will mean for Hawaiian.
But we see it as fairly likely that the eventual structure of this industry are the Big 4, one airline out of Alaska, JetBlue, and Hawaiian, and one airline out of Spirit, Frontier, and Allegiant.