By David Shepardson
(Reuters) -American Airlines (NASDAQ:AAL) and JetBlue Airways (NASDAQ:JBLU) said Friday they will begin to wind down their Northeast Alliance on July 21 after a U.S. judge's order in May that they end the agreement.
JetBlue said last week it would terminate the three-year-old alliance, which allowed the two carriers to coordinate flights and pool revenue.
Both airlines said starting July 21, American and JetBlue customers will no longer be able to book new codeshare bookings on the other airlines.
JetBlue has said it will not appeal the ruling, but American Airlines says it still plans to challenge U.S. District Judge Leo Sorokin's decision that found the partnership "substantially" diminished competition in the domestic airline market.
American is the largest U.S. airline by fleet size while JetBlue is the sixth largest. The alliance's dissolution is a setback to American's strategy to grow revenue by relying more heavily on alliance partners to ferry passengers in uncompetitive markets.
The Northeast Alliance helped American compete in the New York market, where it had been losing money. It allowed American to move away from unprofitable routes while maintaining a presence in New York and letting it feed traffic to its global partners.
JetBlue argues terminating its alliance with American renders "entirely moot" the U.S. Justice Department's objections that led it to file suit to block its merger deal with Spirit Airlines (NYSE:SAVE), which would be the biggest in the U.S. airline industry since American and US Airways merged in 2013.
A trial on the department's suit to block the deal is set for October.
The airlines said they are working "to minimize disruption to customers." For customers with travel already booked, frequent flyer numbers will need to be added to the booking before July 21, they said.
Customers can accrue frequent flyer credit for all tickets purchased prior to July 21 as long as account numbers are added before that date, they said.