Spirit Airlines To Become JetBlue’s Primary Focus Following Antitrust Case, Termination of American Airlines Partnership

JetBlue Airways stated on Wednesday that it will terminate its partnership with American Airlines in the northeastern U.S. following a federal judge’s order to end the agreement. JetBlue’s attention will now shift to its acquisition of Spirit Airlines instead.

In June, American expressed its intention to challenge the ruling against the JetBlue partnership, known as the Northeast Alliance (NEA). However, JetBlue announced on Wednesday that it would not appeal the decision. The ruling was the outcome of a lawsuit brought by the Justice Department, six states, and the District of Columbia in 2021, arguing that the alliance was anticompetitive.

“Despite our firm belief in the procompetitive advantages of the NEA, JetBlue has made the difficult decision not to appeal the court’s determination that the NEA cannot continue as currently structured,” stated JetBlue.

JetBlue has initiated the termination process of the agreement, which will be completed over the next few months. The airline will now shift its focus to the proposed combination with Spirit Airlines.

The partnership between JetBlue and American played a role in JetBlue’s agreement to acquire Spirit Airlines. The NEA, approved in the final days of the Trump administration, permitted the two carriers to jointly serve passengers, share revenue, and coordinate schedules. American and JetBlue sought the alliance to improve their competitiveness against major carriers like United and Delta at congested airports in New York and Boston.

However, in May, a federal judge ruled the partnership to be anticompetitive and ordered the two airlines to dissolve the alliance.

American Airlines announced on Wednesday that it intends to appeal the ruling despite JetBlue’s decision to end the partnership.

“JetBlue has been a valuable partner, and we will continue to collaborate to ensure a seamless travel experience for our mutual customers,” said American in a statement.

An American Airlines spokesperson did not provide immediate details on how the deal could be salvaged if the appeal is successful or if JetBlue plans to proceed with the termination.

“We understand JetBlue’s focus on their other antitrust and regulatory challenges,” the spokesperson added.

JetBlue stated in a securities filing that it informed American of the termination on June 29, citing the judge’s ruling. The termination will become effective on July 29.

JetBlue successfully won the bid to acquire Spirit Airlines in July 2022 after competing against low-cost rival Frontier Airlines. JetBlue argues that the acquisition of Spirit is necessary for its growth and improved competition against larger airlines dominating the domestic air travel market. The consolidated carrier would become the fifth-largest in the country.

The purchase of Spirit would provide JetBlue access to additional aircraft at a time when manufacturers are struggling to meet demand. It would also grant access to a substantial number of pilots, a resource currently in short supply.

From the beginning, the deal has faced obstacles in gaining approval from the Biden administration, which has vowed to challenge transactions that could harm competition.

The Justice Department filed a lawsuit in March to block the acquisition. In the suit, it stated, “JetBlue’s plan would eliminate the unique competition that Spirit provides — along with about half of all ultra-low-cost airline seats in the industry — leaving tens of millions of travelers with higher fares and fewer choices.”

In after-hours trading, Spirit shares rose by over 2%, while both American and JetBlue saw minimal declines.