JetBlue has declared the end of its partnership with American Airlines in the northeastern region of the United States. This move comes in response to a federal judge’s order to dissolve the agreement. It caused JetBlue to redirect its attention towards acquiring Spirit Airlines.
DOJ Blocks NEA
While American Airlines expressed its intent to challenge the ruling, JetBlue confirmed that it will not appeal the decision. The court ruling, a result of a 2021 lawsuit filed by the Justice Department, six states, and the District of Columbia, alleged anticompetitive practices within the alliance.
JetBlue CEO Robin Hayes acknowledged the challenging decision not to appeal in a staff note.
“We have thoroughly considered our next steps, and despite our belief in the procompetitive benefits of the NEA, we have chosen to accept the court’s ruling and initiate the termination process, “he said.”This winding down process will occur over the coming months.”
As a result of the partnership’s termination, Hayes noted that the company may require fewer jobs in New York and Boston. There are not plans to furlough workers at this time.
Anticompetitive
JetBlue’s acquisition of Spirit Airlines materialized during its partnership with American Airlines. Approved during the final days of the Trump administration, the NEA allowed the carriers to collaborate. They can collaborate on passenger sharing, revenue sharing and schedule coordination.
American Airlines and JetBlue argued that their alliance was essential to compete against major carriers in congested airports. However, a federal judge ruled in May that the partnership was anticompetitive, ordering both airlines to dissolve the alliance.
“JetBlue has been an outstanding partner, and we will work with them to ensure our mutual customers can travel seamlessly without any disruptions to their travel plans,” a representative from American Airlines stated on the website. “We, of course, respect JetBlue’s decision to focus on its other antitrust and regulatory challenges.”
Termination Takes Effect July 29
JetBlue disclosed in a securities filing that it notified American Airlines on June 29 of the partnership’s termination. The termination is scheduled to take effect on July 29.
JetBlue successfully secured the deal to acquire Spirit Airlines in July 2022. The company argued that acquiring Spirit was crucial for its growth and to better compete against larger airlines. If combined, the two carriers would become the country’s fifth-largest airline.
However, the acquisition faced significant hurdles in gaining approval from the Biden administration, which pledged to challenge deals that may harm competition. The Justice Department filed a lawsuit in March to block the deal, arguing that JetBlue’s plan would eliminate Spirit Airlines’ unique competition, resulting in higher fares and limited options for tens of millions of travelers.