Partway through the story of Fairy Tail, long before Natsu's team met Warrod the wizard saint or the truth about Mavis and Zeref's relationship came to light, the Fairy Tail guild had slightly more mundane problems: rival guilds like Phantom Lord. Not all wizarding guilds can get along, after all.
Phantom Lord was a neighboring wizard guild headed by Jose Porla, a member of the 10 wizard saints, and Jose wanted to see Fairy Tail burned to the ground in spite -- and he had more than a few potent weapons up his sleeve to get the job done.
Gajeel Redfox & Phantom Lord's Opening Shots
The Phantom Lord story arc began with Phantom Lord launching a pre-emptive assault on Fairy Tail. Natsu's team returned home just in time to find the guildhall demolished with giant iron rods, and Makarov knew exactly what was going on. His bitter rival, Jose Porla, was determined to take the guild down, which meant that Fairy Tail's members had to retreat underground to avoid any more trouble. Phantom Lord is home to a certain Gajeel Redfox who, like Natsu, is a user of Dragon Slayer magic, controlling iron instead of fire.
It was he who ambushed Fairy Tail's Shadow Gear team and stapled them to a large tree. It wasn't long before Fairy Tail's wizards launched a counter-attack on Phantom Lord's own guildhall, with Makarov himself leading the charge. Other powerful wizards like Natsu, Gray and Erza were there, too, while Lucy stayed behind at Fairy Tail... and got herself captured by Phantom Lord wizards.
The battle did not go well for Fairy Tail, whose members struggled against the sheer might of Gajeel and Jose, not to mention the numerous Phantom Lord rank and file. Natsu clashed with Gajeel, dragon slayer vs dragon slayer, and it was a hard-fought battle. Meanwhile, Makarov took on Jose directly, only to suffer a magic-drain spell that left him on death's door. Lucy was held captive in the Phantom Lord HQ, with Jose tormenting her and planning to hand her back to her father, Jude Heartfilia. That plan was foiled when Natsu launched a successful rescue mission, but the threat of Phantom Lord wasn't over yet.
Phantom Lord's Elemental 4 & The Jupiter Cannon
Not long after the failed counter-attack on the Phantom Lord guildhall, Jose Porla launched the final stage of his plan: to bring Phantom Lord's hall right up to Fairy Tail's front gate and unleash its firepower. To everyone's horror, Phantom Lord's guildhall wasn't just a building; it doubled as a mobile weapons platform, complete with mechanical legs and a powerful magical cannon named Jupiter. Jupiter was fueled by a massive lacrima crystal and had the power to destroy anything in its path, and Jose was going to use it on Fairy Tail.
It looked like the end... until Erza Scarlet stepped in front of Jupiter's shot and mustered every ounce of defensive power she had. It worked but left her exhausted. Worse yet, Jupiter was going to fire again in 15 minutes, once it finished recharging.
On top of that, Jose had launched a swarm of magical shade creatures to keep Fairy Tail's defenders busy, and also sent out his elite Elemental 4 team. These wizards challenged the top Fairy Tail members, with Gray Fullbuster taking on Juvia Lockser in a water vs. ice battle while Natsu faced the fire and air wizards, balancing that with the task of destroying Jupiter's lacrima. Natsu succeeded in the end, though, and the Phantom Lord guild hall collapsed in ruins.
Natsu vs. Gajeel: the Final Fight
But one problem remained: Gajeel Redfox, who had found and captured Lucy once again. Natsu does battle with Gajeel for the second time, and this time, he scores a decisive victory with his fire magic, while Jose's shades continue to harass Fairy Tail. By now, Jose is ready to fight Fairy Tail himself, overwhelming Erza with his darkness magic. Makarov steps in to face his rival one last time, and he casts the mighty Fairy Law spell to defeat Jose once and for all and bring about the end of Phantom Lord as a guild.
Once the dust settled, Jose had his Wizard Saint title revoked by the Magic Council, and Makarov expected to face a reprimand for his destructive use of Fairy Law. Elsewhere, Gajeel Redfox is approached by the guild master, who offered him a place in Fairy Tail, believing that Gajeel was not the same kind of terrible person Jose was. Gajeel scoffed at the idea at first, but he would eventually join Fairy Tail, and he and Natsu were two of a kind. Besides, Gajeel's mentor dragon and Natsu's had disappeared at the same time, and that was a mystery worth looking into. Now that Phantom Lord was finished, Natsu and Gajeel could seek the truth together.
Even more ominously, Laxus Dreyar the lightning Dragon Slayer's return was right around the corner. Phantom Lord was not the end of Makarov's worries by any stretch.
