UAL - JetBlue slips announces American alliance wind down steps

2023-07-14 11:00:04 ET

JetBlue Airways Corporation ( NASDAQ: JBLU ) slipped 1.3% on Friday morning after announcing next steps as it winds down its partnership with American Airlines Group ( AAL ).

“We are disappointed to be ending popular benefits like codesharing and reciprocal loyalty benefits,” Dave Fintzen, vice president of the Northeast Alliance at JetBlue, said in a statement. “We know customers will miss these features and believe the U.S. Department of Justice’s position opposing them misses the mark.”

The Northeast Alliance was a 2020 agreement between JetBlue ( JBLU ) and American ( AAL ) meant to increase competition in the Northeast. The airlines cited the dominance of Delta Air Lines ( DAL ) and United Airlines Holdings ( UAL ) in the region and the need to create a third full-scale competitor to face them. The alliance was a virtual network that through codesharing, slot swaps, new international and domestic routes, better schedules and expanded frequent flier program benefits.

JetBlue ( JBLU ) and American ( AAL ) are implementing the following steps to unwind the accord:

Beginning July 21, JetBlue customers will no longer be able to book new codeshare bookings on American Airlines and vice versa.

For customers with travel already booked, TrueBlue or AAdvantage numbers will need to be added to the booking before July 21 to earn points, tiles and reciprocal perks.

Customers can accrue TrueBlue points for all tickets purchased prior to July 21.

JBLU has said it will now focus on its planned acquisition of Spirit Airlines ( SAVE ).

Earlier this week, Evercore ISI lowered its rating on JBLU to Underweight from In-Line. Analyst Duane Pfennigwerth said that the JBLU balance sheet is on a journey from "average to worst" based on 2X to 5X Net Debt to EBITDA pro-forma in comparison to the low-cost mean of 1.2X.

He also warned that integration is complex, and the company’s execution track record as a standalone is mixed.

AAL dropped 1.3% , UAL was lower by 2.3% and DAL fell 1.7% .

More on airlines:

• JetBlue Announces Next Steps of Wind Down Plan for Its Northeast Alliance with American Airlines
• Airline stocks fly high after strong results from Delta Air Lines
• Airline stocks trend lower after U.S. airfares drop in June
• Airline fares fall 19% in June from a year ago
• Seeking Alpha’s Wall Street analyst ratings on JBLU

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