Demise of Northeast Alliance puts JetBlue and American in tight spot: analysts
Analysts paint a grim picture of the situation JetBlue Airways and American Airlines find themselves after a judge struck down their now-four-year collaboration in the Northeast USA, shortly before the peak summer travel season begins. On 19 May, federal Judge Leo Sorokin said the so-called “Northeast Alliance” (NEA) between the carriers was unlawful and violated anti-trust laws. He ordered the venture to be unravelled within 30 days. The carriers have been given 21 days to react. Industry analysts say the ruling was surprising, and its effects complicated. “We view the ruling as most negative for American, at least in the medium term, with the NEA enabling it to reallocate capacity away from marginal or unprofitable routes while still maintaining a strong presence in the Northeast,” writes Raymond James analyst Savanthi Syth. “While American will likely regain its slots leased to JetBlue, it will now have to rebuild JFK and [LaGuardia] at likely lower profitability, given its reliance on regional jets and with the lack of feed from JetBlue.” “The NEA provided [JetBlue] an opportunity to meaningfully improve its corporate position in [New York], with the investment made … unlikely to be recouped,” Syth says. JetBlue will lose the additional slots “with little ability to grow share due to slot constraints in its home market”. Analysts expect the airlines to appeal the decision, which may allow the NEA to continue through the all-important peak Northern Hemisphere summer travel season.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-05-23/oneworld/demise-of-northeast-alliance-puts-jetblue-and-american-in-tight-spot-analysts
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Demise of Northeast Alliance puts JetBlue and American in tight spot: analysts
Analysts paint a grim picture of the situation JetBlue Airways and American Airlines find themselves after a judge struck down their now-four-year collaboration in the Northeast USA, shortly before the peak summer travel season begins. On 19 May, federal Judge Leo Sorokin said the so-called “Northeast Alliance” (NEA) between the carriers was unlawful and violated anti-trust laws. He ordered the venture to be unravelled within 30 days. The carriers have been given 21 days to react. Industry analysts say the ruling was surprising, and its effects complicated. “We view the ruling as most negative for American, at least in the medium term, with the NEA enabling it to reallocate capacity away from marginal or unprofitable routes while still maintaining a strong presence in the Northeast,” writes Raymond James analyst Savanthi Syth. “While American will likely regain its slots leased to JetBlue, it will now have to rebuild JFK and [LaGuardia] at likely lower profitability, given its reliance on regional jets and with the lack of feed from JetBlue.” “The NEA provided [JetBlue] an opportunity to meaningfully improve its corporate position in [New York], with the investment made … unlikely to be recouped,” Syth says. JetBlue will lose the additional slots “with little ability to grow share due to slot constraints in its home market”. Analysts expect the airlines to appeal the decision, which may allow the NEA to continue through the all-important peak Northern Hemisphere summer travel season.<br/>