JetBlue In Talks With United After American Airlines Alliance Fail

JetBlue is reportedly discussing a potential partnership with United Airlines after its planned Northeast Alliance with American Airlines failed. The Department of Justice sued to block the alliance between the two airlines in 2021, characterizing it as anti-competitive.

“The Northeast Alliance would eliminate significant competition in this important industry,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division. “This sweeping partnership is unprecedented among domestic airlines and amounts to a de facto merger between American and JetBlue in Boston and New York City. The impact on consumers extends far beyond Massachusetts and New York, as evidenced by the participation and our ongoing cooperation with Attorneys General from across the country, including Arizona, California, Florida, Massachusetts, Pennsylvania, Virginia and the District of Columbia, in this lawsuit.”

A federal judge sided with the DOJ in the matter and the two airlines had been trying to salvage their plans since.

American Airlines Sues JetBlue For Costs

American lost an appeal of the judge’s decision in 2023. The two airlines have been working to wind down the agreement. American Airlines sued JetBlue for over $1 million to cover the dissolution costs this Monday.

American Airlines publicly shared an internal letter from Steve Johnson, Vice Chair and Chief Strategy Officer, following reports of the suit.

“In recent months, we had been exploring an opportunity to further enhance our network by renewing a partnership with JetBlue. As always in considering partnerships, the objective was to advance our business strategy and enhance our customer proposition by building on American’s network position and giving a partner’s customers access to our global network and the world’s best loyalty program in AAdvantage,” Johnson wrote. “Although we proposed a very attractive proposition to JetBlue and its customers and team, it became clear over time that JetBlue was focused on different business priorities. Ultimately, we were unable to agree on a construct that preserved the benefits of the partnership we envisioned, made sense operationally or financially, or was consistent with the travel rewards and co-branded card business objectives that are so important to our strategy and our customers.”

Johnson announced the suit in the letter, writing, “We understandably tabled this claim while we were in discussions with JetBlue, but now that those conversations have concluded, we need to address the accounting and reconciliation following the termination of the NEA.”

During JetBlue’s earnings call, CEO Joanna Geraghty addressed the suit, saying the airline had not yet been served. However, she played down its importance, stating, “This is not an unexpected turn and part of just shrewing up any monies owed between the parties.”

JetBlue’s CFO Ursula Hurley answered questions on the possibility of JetBlue striking a similar partnership with other airlines, saying: “We’re going to be announcing another partner down the road, hopefully in this quarter, and excited to be doing that. We’ll let the wind down of the NEA take place as it has been for the past couple of years. But we’ve been meeting with multiple carriers, and obviously the value that we think of regarding the partner we’re announcing drives more for JetBlue than other carriers that may have been in those considerations then.”

A TrueBlue Partnership

The airline’s President, Marty St. George, also addressed the nature of the potential partnership, saying, “We’re getting very close to making an announcement, expecting to make the announcement this quarter. And as far as the benefits that we expect to offer to our customers, then the most important thing is, number one, a significantly higher network opportunity for earn and burn of TrueBlue Points, which we think greatly improves the utility of TrueBlue.

“And that means, for example, today if you are a customer in the Northeast and you love JetBlue for leisure, but twice a year you have to go to Omaha or Boise, these are places that you can’t earn TrueBlue Points on now, and when the partnership goes forward, you will be able to. And the second thing is I’m really excited for just the overall broadening of the network opportunities, not just connectivity, but also just a sort of better opportunity to our customers to fly more places with more frequency.”

United Steps In As American Steps Out

Reuters has cited three industry sources saying that United Airlines is negotiating a partnership with JetBlue. The new partnership would avoid some of the issues that led to the block of the American Airlines deal, by focusing on extended connectivity and loyalty program alignment rather than schedules and pricing.

Currently, Delta Air Lines has the dominant share of domestic traffic at New York John F. Kennedy airport, according to data from industry analytics company Cirium. It shows a total of 5,068 domestic Delta flights scheduled for May; 2,656 of these are operated by Delta and the balance by its regional operators, Endeavor Air, SkyWest and Republic. Delta has allocated a total capacity of 677,849 seats on domestic flights from JFK.

JetBlue has the second-highest share of flights, 3,256 in all, with capacity of 512,240 seats.

American Airlines has 2,016 flights scheduled, 789 of which are operated by Republic and 241,415 seats.

There has also been some speculation that United might acquire JetBlue. However, in January, United denied any such interest to the U.S. Securities and Exchange Commission.

United’s CEO, Scott Kirby, has expressed hesitation over overcoming the regulatory hurdles required for the airline to establish domestic routes at JFK airport through acquisition, citing “all the headache, all the brain damage of buying a whole airline to get there.”