JetBlue Airways (NASDAQ:JBLU) is reportedly exploring potential merger partners, a move that comes amid broader consolidation trends in the US airline industry, according to analysts at UBS, who believe increased M&A activity could support a healthier industry over the long term.
JetBlue, which maintained a strong balance sheet and double-digit EBIT margin before the COVID-19 pandemic, has faced challenges in recent years, including rising fuel costs, competitive pressures, and engine issues. The airline recorded free cash flow losses of over $1 billion in 2025 and UBS models a similar cash burn for 2026, up from prior estimates of around $500 million.
Despite these challenges, JetBlue has made progress with its JetForward plan, though its core operations continue to struggle, according to UBS. Its EBIT margin fell from 10.1% in 2019 to -3.7% in 2025, and the company ended last year with approximately $9 billion in debt and lease obligations, including $7 billion in net debt. UBS noted that merging with a financially stronger partner could help JetBlue preserve its market presence in key regions, such as Fort Lauderdale and Latin American routes, while providing additional liquidity for investment.
Potential partners under consideration reportedly include United Airlines Holdings Inc (NASDAQ:UAL, XETRA:UAL1), Alaska Air Group (NYSE:ALK), and Southwest Airlines Co (NYSE:LUV). UBS highlighted that route overlaps between JetBlue and these carriers are limited, approximately 3% to 3.5% for ALK and LUV, and around 9.5% for UAL, reducing potential regulatory concerns.
For UAL, a merger would provide access to key airports including JFK, Boston, and Florida, though it may delay the carrier’s goal of reaching an investment-grade rating. ALK could achieve coast-to-coast reach by combining its West Coast strength with JetBlue’s East Coast presence, though the airline is still integrating its acquisition of Hawaiian Airlines. LUV would similarly gain East Coast access, but its ongoing business transformation may complicate merger timing.
UBS concluded that while each potential deal presents strategic opportunities, any merger would require careful evaluation of JetBlue’s current leverage and operational challenges.