JetBlue says it will not appeal a judge’s ruling against its partnership with American Airlines, effectively abandoning the deal in an attempt to save its purchase of Spirit Airlines.
JetBlue Airways said Wednesday it would end its deal with American in New York and Boston and “focus even more” on its proposed $3.8 billion acquisition of Spirit.
The US Department of Justice sued to block both JetBlue-American Contract and JetBlue Spirit buying on the grounds that they affect competition. The government said consumers would suffer if Spirit, the country’s biggest discount airline, was scrapped.
JetBlue hopes that dropping its deal with American could persuade the Justice Department to allow Spirit to proceed with the purchase.
A federal judge ruled in May that JetBlue and American to end their partnership, is called Northeast Alliance because it violates US antitrust law. After JetBlue’s announcement on Wednesday, American said it respected JetBlue’s “decision to focus on its other antitrust and regulatory challenges” but that it would move forward with its own appeal in the case.
JetBlue’s decision to buy Spirit through a geographically limited deal with American has been looming large in recent weeks as JetBlue declined to say whether it would appeal the Northeast Alliance ruling.
While the deal with American will help JetBlue grow in one area of the country, buying Spirit will help JetBlue grow faster. Almost 10% of the nationwide air travel market. That would put JetBlue as close as United, Delta, Southwest — and American.
Last month, JetBlue and American asked U.S. District Judge Leo Sorokin to allow the sale to proceed Ticket sales on each other’s flights, an arrangement known as code-sharing, and provides mutual frequent flyer benefits. It now appears that those features will also be gone.
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