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JetBlue shares slip after carrier says it will terminate American alliance

Published 07/06/2023, 07:38 AM
© Reuters.

Investing.com -- Shares in JetBlue Airways Corporation (NASDAQ:JBLU) slipped in premarket trading on Thursday after the carrier announced that it would not appeal a judge's order to end an alliance with American Airlines Group (NASDAQ:AAL).

JetBlue said in a statement on Wednesday that, while it disagreed with the U.S. court order, it has initiated the process to wind down the three-year alliance. American said that it has "respect" for JetBlue's decision.

New York-based JetBlue said it will instead focus on its planned $3.8 billion merger with Spirit Airlines (NYSE:SAVE) -- the biggest in the U.S. airline industry since the tie-up between American and US Airways in 2013.

By terminating the American partnership, JetBlue argued that the U.S. Department of Justice's objections to the Spirit merger have been rendered "entirely moot." The DOJ previously filed a lawsuit to block the deal, claiming that it would "lead to higher fares and fewer seats, harming millions of consumers on hundreds of routes."

The DOJ declined to comment to Reuters.

U.S. District Judge Leo Sorokin ruled in May that JetBlue and American must end their partnership. Sorokin said the so-called "Northeast Alliance," which in effect allowed American to maintain a New York presence while giving less lucrative routes to partners operating in these regions, was "substantially" diminishing competition.

American described the ruling as "erroneous," adding that it will move forward with an appeal. Shares in the company were lower in premarket trading on Thursday.

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