JetBlue has announced that it will terminate its partnership with American Airlines in the Northeast following a court battle over the agreement. Instead, JetBlue will focus on salvaging its proposed acquisition of Spirit Airlines. The decision comes after a federal judge ruled against the JetBlue-American deal and urged the Justice Department to reconsider its opposition to a JetBlue-Spirit combination.
The Justice Department filed a lawsuit to block both the JetBlue-American deal and JetBlue’s purchase of Spirit for $3.8 billion, citing concerns about competition. Last fall, the Justice Department won a trial in Boston, with US District Judge Leo Sorokin ruling in May that the airlines must end their Northeast Alliance due to antitrust violations.
JetBlue, based in New York, expressed disappointment but announced that it will not appeal the court’s ruling and has initiated the termination of the Northeast Alliance. The process will take place over the next few months. JetBlue stated that it will now shift its focus towards its proposed combination with Spirit.
American Airlines, in response to JetBlue’s decision, stated that it respects their choice to concentrate on other antitrust and regulatory challenges. However, American will proceed with its own appeal in the case. In recent weeks, it became increasingly likely that JetBlue would choose the purchase of Spirit over a geographically limited deal with American, especially considering JetBlue’s silence on whether they would appeal the Northeast Alliance ruling.
While the alliance with American allowed JetBlue to expand in a specific region, acquiring Spirit would enable JetBlue to experience rapid growth and capture nearly 10% of the nationwide air-travel market. This would place JetBlue closer in size to major competitors like United, Delta, Southwest, and American.
After JetBlue’s announcement, American and JetBlue asked Judge Sorokin to continue allowing them to sell tickets on each other’s flights through code-sharing and provide reciprocal frequent-flyer benefits. The judge has yet to rule on this request, but these features of the Northeast Alliance will now be discontinued. Additionally, a trial has been scheduled for October regarding the Justice Department’s lawsuit against the JetBlue-Spirit merger, with the government arguing that consumers will be disadvantaged if Spirit, the largest discount airline in the country, is eliminated.
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