JetBlue Airways said Wednesday that it will end its partnership in the northeast U.S. with American Airlines after a federal judge ruled to block the agreement as the New York airline focuses on its acquisition of Spirit Airlines instead.
American said last month that it would challenge the ruling against the JetBlue partnership, but New York-based JetBlue said Wednesday it would not appeal the decision.
“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 that the NEA cannot continue as currently crafted,” JetBlue said in a statement.
JetBlue said it has started terminating the agreement, “a wind down process that will take place over the coming months.” JetBlue said it will “now turn even more focus to our proposed combination with Spirit.”
JetBlue’s deal to buy Spirit came together after JetBlue and American launched a partnership in the Northeast. The so-called Northeast Alliance, approved during the last days of the Trump administration, allows the two carriers to share passengers and revenue and to coordinate schedules.
But a federal judge ruled in May that that partnership was anticompetitive, ordering the two airlines to undo the alliance.
American Airlines said Wednesday that it will still appeal the ruling.
“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 said in a statement on its website.
A spokesman for the airline did not immediately say how American could salvage the deal if JetBlue plans to begin unwinding it.
“We, of course, respect JetBlue’s decision to focus on its other antitrust and regulatory challenges.”
JetBlue won the deal to acquire Spirit in July 2022 after a bidding war with low-cost rival Frontier Airlines. JetBlue has argued it needs Spirit in order to grow and better compete against larger airlines that dominate domestic air travel. The combined carrier would become the country’s fifth-largest.
The purchase of Spirit would give JetBlue access to more aircraft at a time when manufacturers are struggling to keep up with demand. It would also gain access to hundreds of pilots, which are also in short supply.
From the start that deal has faced a high hurdle from the Biden administration, which has vowed to challenge deals it finds harm competition.
The Justice Department sued to block the deal in March, arguing that the “unique competition that Spirit provides — and about half of all ultra-low-cost airline seats in the industry — and leave tens of millions of travelers to face higher fares and fewer options,” if the airline merged with JetBlue.
Spirit shares were up more than 2% in afterhours trading, while American and JetBlue were each down less than 1%.