The airline industry is buzzing over an imminent split between JetBlue (JBLU) -) and American Airlines (AAL) -) two months after a U.S. federal court judge grounded the alliance over antitrust issues.
The decision paved the way for JetBlue to set a new course, as it announced today that not only is it cutting ties with American it’s also ramping up efforts to purchase Spirit Airlines (SAVE) -) in a reported $3.8 billion deal - if it’s concluded.
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On May 19, U.S. District Court Judge Leo Sorokin order both airlines to split up, with the order citing “substantially” lower competition if the partnership were to continue. The decision was a major win for the U.S. Department of Justice, which sued in 2021 to end the so-called “Northeast Alliance.”
Approved in the last week of the Trump Administration, the JetBlue-American alliance would enable the two airlines to pair up on schedules and share revenues and passengers.
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The DOJ apparently won over Judge Sorokin by noting the JetBlue-American partnership was actually a “de facto merger” between the two airlines that would elbow other airline companies out of the busy and profitable Boston-New York air travel connection. The Justice Department also noted the partnership could cost Northeast air travelers an extra $700 million in costs if the JetBlue-America alliance was left intact.
American Airlines said on June 6 it will appeal the May ruling, even though the company is mum on how it would stitch the relationship back together after JetBlue’s surprise pivot with Spirit was announced the same day.
“JetBlue has been a great partner, and we will continue to work with them to ensure our mutual customers can travel seamlessly without disruption to their travel plans,” American noted in a statement on its website.
For its part, JetBlue is not looking in the rear-view mirror after today's announcement.
"This decision will enable us to focus even more on our combination with Spirit," CEO Robin Hayes said in a staff memo, as reported by Reuters. JetBlue also expects to save money since it doesn’t have to staff up in Northeast airports after the split with American, Hays added.
A “wind-down process that will take place over the coming months” is already set to go, JetBlue stated.
