JetBlue is dumping its partnership with American Airlines to salvage its purchase of Spirit
JetBlue said it will end its partnership with American Airlines in the Northeast after losing a court case over the deal, and will instead focus on salvaging its proposed purchase of Spirit Airlines.
JetBlue Airways said on Wednesday that it would not appeal a federal judge’s ruling blocking the deal with the Americans.
With its decision, JetBlue said the US Department of Justice should reconsider opposing the JetBlue-Spirit combination.
The Justice Department sued to block both the JetBlue-American deal and JetBlue’s deal to buy Spirit for $3.8 billion on the grounds that they would harm competition.
The Justice Department won a trial in Boston last fall over the JetBlue-US partnership. US District Judge Leo Sorokin decided in May that airlines must terminate the Northeast Alliance, or NEA, beginning in 2021, because it violated US antitrust laws.
“While we strongly believe in the competitive interests of the NEA, after much deliberation, JetBlue has made the difficult decision not to appeal the court’s decision… in the coming months. ,” New York-based JetBlue said in a statement. “We will now focus even more on our proposed combination with Spirit.”
Shortly after JetBlue’s announcement, American said it respected JetBlue’s decision to “focus on other legal and antitrust challenges,” but it would continue with its own appeal in the case.
JetBlue’s decision to choose to buy Spirit in a geographically restricted deal with Americans has become increasingly likely in recent weeks, as JetBlue declined to say whether it would appeal the Union ruling. Northeast or not.
While the deal with the Americans has helped JetBlue grow in one part of the country, buying Spirit will help JetBlue grow rapidly to nearly 10% of the nationwide air travel market. That would bring JetBlue closer in size to United, Delta, Southwest — and American.
Last month, JetBlue and American asked Judge Sorokin to allow them to continue selling tickets on each other’s flights, an arrangement known as code-sharing and offering benefits for frequent flyers. again. The judge has not ruled on the claim, but those features of the NEA will now be gone.
Meanwhile, a trial is scheduled for October in the Justice Department’s case against the JetBlue-Spirit merger. The government argues that consumers will be affected if Spirit – the nation’s largest discount airline – is phased out.
Savanthi Syth, Raymond James aviation analyst & Associates, said JetBlue’s withdrawal from its deal with American slightly improves its chances of buying Spirit. She said JetBlue could point to the decision – and a conditional deal to sell Spirit’s operation at New York’s LaGuardia Airport – as signs that it is trying to assuage concerns about the reduction. compete.
