JetBlue is picking Spirt Airlines over American
JetBlue says it will end a partnership with American Airlines in the Northeast after losing a court fight over the deal, and will instead focus on salvaging its proposed purchase of Spirit Airlines.
JetBlue Airways said Wednesday that it will not appeal a federal judge’s ruling blocking the deal with American.
With its decision, JetBlue said the U.S. Justice Department should reconsider its opposition to a JetBlue-Spirit combination.
The Justice Department sued to block both the JetBlue-American deal and JetBlue’s agreement to buy Spirit for $3.8 billion on grounds that they would hurt competition.
The Justice Department won a trial in Boston last fall over the JetBlue-American partnership. U.S. District Judge Leo Sorokin decided in May that the airlines must end their Northeast Alliance, or NEA, which began in 2021, because it violates U.S. antitrust law.
“Despite our deep conviction in the procompetitive benefits of the NEA, after much consideration, JetBlue has made the difficult decision not to appeal the court’s determination … and has instead initiated the termination of the NEA, beginning a wind down process that will take place over the coming months,” New York-based JetBlue said in a statement. “We will now turn even more focus to our proposed combination with Spirit.”
Shortly after JetBlue’s announcement, American said it respects JetBlue’s decision “to focus on its other antitrust and regulatory challenges,” but it will press ahead with its own appeal in the case.
JetBlue’s decision to choose a purchase of Spirit over a geographically limited deal with American grew more likely in recent weeks, as JetBlue declined to say whether it would appeal the Northeast Alliance ruling.
While the deal with American helped JetBlue grow in one region of the country, buying Spirit would let JetBlue grow quickly to nearly 10% of the nationwide air-travel market. That would make JetBlue much closer in size to United, Delta, Southwest — and American.
Last month, JetBlue and American asked Judge Sorokin to let them keep selling tickets on each other’s flights, an arrangement called code-sharing, and offering reciprocal frequent-flyer benefits. The judge has not ruled on the request, but those features of the NEA will now go away.
Meanwhile, a trial has been scheduled for October in the Justice Department’s lawsuit against the JetBlue-Spirit merger. The government argues that consumers will suffer if Spirit — the nation’s biggest discount airline — is eliminated.
Savanthi Syth, an airline analyst for Raymond James & Associates, said JetBlue’s withdrawal from the deal with American marginally improves its chances to buy Spirit. She said JetBlue could point to the decision — and a conditional agreement to sell Spirit’s operation at LaGuardia Airport in New York — as signs that it is trying to ease concerns about reduced competition.