“We have spent a lot of time considering our next steps and, while we believe in the pro-competitive benefits of NEA, we have made the difficult decision not to appeal the court's decision and instead have initiated the termination of NEA, initiating a liquidation process that will take place in coming months,” JetBlue CEO Robin Hayes said in a staff memo Wednesday.
As a result of that downsizing, Hayes said the company will likely need fewer jobs in New York and Boston, although the airline has no plans to lay off workers.
JetBlue's deal to buy Spirit came after JetBlue and American launched the Northeast partnership. The NEA, approved in the final days of the Trump administration, allows the two carriers to share passengers and revenue and coordinate routes. American and JetBlue said they needed the deal to better compete with major carriers such as United and Delta at congested airports in the New York area and Boston.
But a federal judge ruled in May that the partnership was anticompetitive, ordering the two airlines to undo the alliance.
American Airlines said Wednesday it will continue to appeal the decision.
“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.
An airline spokesman did not immediately say how American could salvage the deal if it wins an appeal if JetBlue plans to begin its cleanup.
“Of course, we respect JetBlue's decision to focus on its other antitrust and regulatory challenges.”
JetBlue said in a securities filing that it notified American on June 29 that it was ending the partnership because of the judge's ruling. JetBlue said the termination will take effect July 29.
JetBlue won the deal to acquire Spirit in July 2022 after a bidding war with low-cost rival Frontier Airlines. JetBlue has argued that it needs Spirit to grow and better compete with the larger airlines that dominate domestic air travel. The combined carrier will become the country's fifth largest.
Buying Spirit would give JetBlue access to more aircraft at a time when manufacturers are struggling to keep up with demand. It will also gain access to hundreds of pilots, who are also in short supply.
From the start that deal faced a high hurdle to win approval from the Biden administration, which has vowed to challenge deals it finds hurt competition.
The Justice Department sued to block the deal in March. “JetBlue's plan would eliminate the only competition that Spirit provides — and about half of all ultra-low-cost airline seats in the industry — and leave tens of millions of travelers facing higher fares and fewer choices,” the lawsuit said.
JetBlue shares fell more than 7% on Thursday, the first day of trading after JetBlue said it would not appeal the decision. American lost more than 2% and Spirit gained 1%.
