Jetblue ends battle to keep American Airlines alliance

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Jetblue ends battle to keep American Airlines alliance

JetBlue Airways Corp. isending a legal battle to keep its regional alliance with American Airlines Group Inc. in an effort to gain regulatory support for its acquisition of Spirit Airlines Inc.

JetBlue said Wednesday that it won't appeal a federal court's decision that its Northeast Alliance violates antitrust laws and will wind down the venture with American over the next few months. The carrier will focus on saving its $3.8 billion deal with Spirit, which has been challenged for allegedly violating antitrust laws.

We hope taking the U.S. Department of Justice's misplaced concerns about our partnership with a legacy carrier off the table will help us when we go to trial this fall to obtain approval from the court to move forward with our Spirit acquisition, says Robin Hayes, chief executive officer of JetBlue.

The Justice Department declined to comment on the decision. Savanthi Syth, an analyst at Raymond James, said the news on the margin improves the probability that the JetBlue-Spirit merger gets approved. JetBlue and American shares were down less than 1% in extended New York trading at 6:39 p.m. Friday. Spirit rose to 2.3% in value compared to a year ago.

With the alliance, JetBlue has ramped up flying in New York and Boston, and now will probably need fewer workers in both cities, Hayes said. By reducing hiring, natural attrition and providing workers with alternatives, the airline expects to avoid furloughs.

American Airlines is still going to appeal what it called an erroneous court decision against the Northeast Alliance. In a statement, JetBlue said it respects JetBlue's decision and will work with the airline to ensure mutual travel plans of mutual customers are not disrupted.

With the discontinuation of the NEA, JetBlue declined to speculate on the appeal process, but said, With the termination of the NEA, we are taking it off the table as it relates to the Spirit lawsuit. Spirit - the largest discount carrier - is the only way it can gain the size and heft to compete with larger carriers that dominate the US market, JetBlue said in a statement. An October 16 trial date has been set in that case.

In October, JetBlue won a tough fight against Frontier Group Holdings Inc., when Spirit shareholders rejected a pending deal with that carrier in favor of the more lucrative rival offer. The two companies, JetBlue and Spirit, have said they will still receive required regulatory approvals and close the transaction no later than the first half of 2024.

It is a tough fight given President Joe Biden's anti-consolidation stance. But they must convince the Justice Department that the merged airline won t have enough market concentration in some cities to give it an unfair pricing and competitive advantage. In June JetBlue agreed to sell Spirit's operations in New York's LaGuardia Airport to Frontier, which was to help quell antitrust concerns, contingent upon closing of the pending merger.

JetBlue will sell Spirit's LaGuardia assets to rival Frontier for an undisclosed amount.

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