US Airlines: Chart of the Day: Financial Distress/M&A Debates Returning To The Forefront In US Airlines

Debates around M&A and financial distress are returning across the industry alongside 2026's Fuel Shock 2.0. This isn't a huge surprise because we are entering 'financial distress season.' As a reminder, we've shown that historical airline bankruptcy events cluster seasonally alongside the ebb and flow of working capital, which gets worse through the fall and tends to peak in the winter. Specifically, the month of January has seen the most airline bankruptcies in recent decades. Accordingly, investor focus is on the possibility of (1) airline bankruptcies, (2) M&A as a solution for distressed carriers, and (3) incremental capacity cuts as airlines may be forced to reorganize. We believe the risk of all 3 events is again rising across the industry. We estimate the largest cash burn in 2027 at JBLU - where we get the most questions on these topics.