American Airlines has brought a lawsuit against former Northeast Alliance (NEA) partner JetBlue Airways as talks to revive that alliance have fallen apart.
In a recent letter to American employees, chief strategy officer Steve Johnson addressed “industry rumours and media reports” regarding attempts to revive the NEA, which once saw the carriers collaborate to compete against Delta Air Lines and United Airlines in busy Boston and New York hubs.
Johnson confirms that American and JetBlue had been “exploring an opportunity” to revive their NEA partnership, which was dissolved in July 2023 following a federal judge’s ruling that the partnership violated US antitrust laws. But talks were revived in recent months under a new US administration, thought to be more open to consolidation and collusion within the airline sector.
He asserts that American presented a “very attractive proposition” to JetBlue, which had “different business priorities”.
”Ultimately, we were unable to agree on a construct that preserved the benefits of the partnership we envisioned, made sense operationally or financially, or was consistent with the travel rewards and co-branded card business objectives that are so important to our strategy and our customers,” Johnson says in the letter.
JetBlue executives acknowledged in February that they had been shopping for an airline partner and engaging in talks with “multiple airlines”. A reunion with American seemed at the time like a distinct possibility.
But those talks crumbled. Now, American has filed a lawsuit in a Texas business court seeking to “recover amounts due to American” related to a revenue-sharing arrangement that American alleges left it holding the bag.
American says in the lawsuit that JetBlue repeatedly failed to make payments under the revenue-sharing agreement, culminating with American invoicing JetBlue for complete payments due no later than January 2024.
“JetBlue, however, has refused to pay that amount,” American says. ”And despite American’s good-faith efforts to resolve the parties’ dispute, JetBlue continues to ignore its contractual obligations.”
American notes in the lawsuit that the amount sought exceeds $10 million, and that the conditions of the NEA’s dissolution call for the settling of any outstanding debts between the companies.
SEEKING CONNECTION
JetBlue president Marty St George said during the company’s 29 April earnings call that the company has made “good progress on discussions regarding a domestic airline partnership, and are expecting an output at some point during the second quarter”.
Asked by an analyst what such a partnership would bring to JetBlue’s business, St George adds that JetBlue remains engaged in negotiations with multiple carriers and expects to make a decision before the year’s halfway mark.
”As far as the benefits that we expect to offer to our customers, the most important thing is… a significantly higher network opportunity for earn and burn of TrueBlue points,” he says.
JetBlue’s ideal airline partner would fill in the map outside of its domestic leisure network, allowing its loyalty programme members to earn points when flying to cities such as Omaha and Boise.
Notably, Reuters reports that JetBlue is exploring a potential partnership with United.
”I’m really excited for the overall broadening of the network opportunities – not just connectivity, but also just a sort of better opportunity for customers to fly more places with more frequency,” St George says.
Meanwhile, American is pursuing its own strategy in Boston and New York without JetBlue’s help, Johnson says in his letter to airline employees.
”We remain intently focused on and are competing aggressively in New York and Boston, and we are committed to enhancing our customer proposition in the Northeast,” he says.
Johnson notes that American has added about 20 routes out of New York’s LaGuardia International and John F Kennedy International airports over the past year, using slots re-awarded to it following the dissolution of the NEA.
Both American and JetBlue are under pressure to address patterns of disappointing financial performances.
