JetBlue Airways, seeking to protect a $3.8 billion purchase of Spirit Airlines, said on Wednesday it would follow a judge's May order that it end an alliance with American Airlines.
The carrier, which operates flights in New York, said it would not appeal the court's ruling.
The airline said it had informed American about its decision to end the three-year-old alliance, which allowed the two carriers to coordinate flights and pool revenue.
JetBlue said it would be the biggest airline industry since American and US Airways merged in 2013 and said it would be the biggest in the U.S. airline industry.
This decision will enable us to focus even more on our combination with Spirit, said Robin Hayes, chief executive of the company.
STAND OUT Andre Barlow, an antitrust attorney at Doyle, Barlow Mazard PLLC, said he did not think that terminating the alliance would change JetBlue's odds in its legal battle over the Spirit deal.
I don't think it helps, Barlow said. It's even better for the DOJ. The alliance's collapse is a disabling blow to American's strategy to generate revenue by relying heavily on alliance partners to ferry passengers in uncompetitive markets.
The route allowed Americans to move away from unprofitable routes while keeping a presence in New York and allowing it to feed traffic to its global partners who fly into the region.
In a statement, American has yet to elaborate on its plans for JetBlue's capacity. The carrier could now have to rebuild its capacity or cut international flights out of the region.
On May 19, the U.S. District Judge Leo Sorokin in Boston ordered JetBlue and American to end the partnership, saying it significantly decreased competition in the domestic market.
In 2021, the DOJ filed a lawsuit to undo the Northeast Alliance, which was announced the previous year. It referred to a de facto merger between American and JetBlue operations in Boston and New York, which eliminated incentives to compete and would end up costing consumers an additional $700 million a year to fly out of the region's busy airports.
JetBlue said it did not mean any immediate changes to customer services, and said its decision to discontinue the alliance would not result in any immediate changes. The company said it expects to work out a winddown plan that protects consumers.
Without the alliance, Hayes said, JetBlue would likely need fewer employees in New York and Boston. He said the company would manage staffing levels using natural attrition, options for transfer to other cities and a reduction in new hires rather than furloughs.