After an earlier attempt to acquire Avelo and aha! to create the super ULCC bravaha! fell through, Breeze has now moved on to a bigger prize. The airline will buy JetBlue and merge the two under the JetBlue name, returning David Neeleman as CEO of the airline from which he was booted in 2007.
The deal — which Neeleman announced wearing wire-rimmed glasses, a black turtleneck, jeans, and tennis shoes — has Breeze valuing JetBlue at $1.99 under current management, but since JetBlue shareholders won’t go for that, it offered $5.62 billion, or roughly a 20 percent premium over the airline’s current market cap. The deal will see JetBlue shareholders get a mix of cash and stock in the new company along with 10 bags of blue chips for every share owned. The new JetBlue will celebrate the acquisition with two new tailfins designed by David, meant as an homage to the previous management teams of the two separate airlines.
JetBlue first took flight in 2000 with David Neeleman at the helm. His vision culminated in a deal to secure a giant pool of slots at JFK which allowed the airline to flourish early. David’s trademark style of rapid growth, however, got him into trouble when in 2007 the airline melted down on Valentine’s Day after it kept trying to operate in a snowstorm when it should have given up. The board of directors gave David the boot soon after, replacing him with Dave Barger who had previously headed the operation.
Ever since that time, JetBlue has been a different airline with a far more conservative growth plan. It seemed clear that David always wanted to return, so his mind drifted to
the fortress of solitude Brazil to plot his move. There, David founded a different blue airline called Azul which became wildly successful, but it was missing something… mostly the “Jato” behind the “Azul.” (That’s JetBlue in Portuguese, get it? GET IT?!)
While he was dreaming of his return to US soil, a cool wind blew past his Connecticut home and David thought up Breeze, an airline that would bring him back using A220s to fly longer, thin routes that other airlines realized would never work. That strategy has now been amplified with a bunch of cheap Embraer 190/195s he was able to move from Azul (and acquire elsewhere).
David has 80 A220s on order, but that is nothing compared to the 280+ airplanes he will now control when he takes over JetBlue. The expectation is that he will add another 1,000 airplanes to the orderbook since that’s a nice, round number. And he definitely won’t have any trouble finding a place to fly them. Definitely.
The first move is to realign the network and fleet strategy. The new JetBlue has already angered American by trading Southwest a bunch of LaGuardia slots so it can get back into Long Beach. (The DOJ immediately blamed American.) David then announced a plan to acquire unwanted A330s from Azul for cheap so the airline can launch flights from Salt Lake City to Brazil.
The onboard product will also see changes. JetBlue today has four primary offerings of Blue Basic, Blue, Blue Extra, and Mint. Meanwhile, Breeze has Nice, Nicer, and Nicest. The new grid will involve five product types as follows.
To ensure there is enough availability in the top cabin, the A321s will be refitted with 48 Mint seats, 30 Even More Space+ Extra seats, and 24 seats in the back. Meanwhile, the Embraers will have only 9 seats so that they can be operated under Part 135 rules. Finding enough pilots for 1,000 new airplanes will be a challenge, so this will help create a sustainable pipeline.
All of this, of course, relies upon government approval which is definitely not going to happen. But that’s ok, because none of this is going to happen, at least not today. Happy April Fools’ Day!