US and European Mergers:
The Long View — April 2024

Airline mergers and acquisitions are generally very profitable — for the investment banks, law companies and management consultants that work on and promote the transactions. The experience for airline employees, investors and passengers is frequently painful. M&A is an exciting alternative to the exacting business of running an airline, offering an attractive solution to complex problems, but the logic for mergers is not as compelling as it is presented.

The charts may give the impression that consolidation in the US and Europe through M&A is an inevitable process, airlines rationalising over time into fewer, larger entities. So it came as a bit of a shock when in January, a federal court upheld the Department of Justice’s antitrust suit and refused the proposed merger of JetBlue and Spirit, the sixth and seventh largest US carriers. The two carriers subsequently had to abandon at very significant expense their merger programme, clearly shocked by the legal ruling which was the first time that that a US airline merger had been rejected on antitrust grounds.