JetBlue will pay dearly to end its alliance with American Airlines
JetBlue Airways was always going to lose some revenue by ending its alliance with American Airlines in the northeastern US. The hit, disclosed Tuesday, is big and will cut the carrier’s full-year profit per share outlook down by at least a fifth. The New York-based airline expects ending the alliance, known as the “NEA,” will reduce full-year earnings per share, a measure of profits, by $0.20-25 in 2023. To put that in perspective, JetBlue in April forecast full-year earnings per share with the alliance to be $0.70-1.00. Now, it expects the profit metric to be a measly $0.05-0.40 in 2023 after ending the alliance. The air traffic control staffing-related cancellations in New York and the shift in travel patterns to international trips this summer also weigh on the airline’s full-year outlook. “Our decision to terminate the NEA will result in a near-term drag on margins as we lose key codeshare revenue,” JetBlue CEO Robin Hayes said Tuesday. And, in addition to lost revenue, costs related to the alliance will “linger” due to the slow wind-down of the pact, he added. JetBlue and American began unwinding their alliance on July 21 when both carriers stopped taking new bookings under the pact. Many expect a so-called “drain down” end to the partnership where all existing bookings drain out of the system as no new ones are taken. The decision to end the alliance followed a federal judge’s ruling in May that found it to be in violation of U.S. antitrust law and ordered the pact terminated. American, for its part, plans to appeal the ruling. The Fort Worth, Texas-based carrier has said the end of the JetBlue alliance is not “material” on its full-year financial outlook. “As we head into 2024, we will be able to mitigate the impact as we are increasingly able to redeploy capacity currently underperforming in NEA markets to high-margin leisure opportunities throughout our network,” Hayes said on the longer-term outlook. He and other executives were not more specific on where that Boston and New York capacity could go, however, the airline is strong in large leisure markets like Florida and the Caribbean.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-08-02/unaligned/jetblue-will-pay-dearly-to-end-its-alliance-with-american-airlines
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JetBlue will pay dearly to end its alliance with American Airlines
JetBlue Airways was always going to lose some revenue by ending its alliance with American Airlines in the northeastern US. The hit, disclosed Tuesday, is big and will cut the carrier’s full-year profit per share outlook down by at least a fifth. The New York-based airline expects ending the alliance, known as the “NEA,” will reduce full-year earnings per share, a measure of profits, by $0.20-25 in 2023. To put that in perspective, JetBlue in April forecast full-year earnings per share with the alliance to be $0.70-1.00. Now, it expects the profit metric to be a measly $0.05-0.40 in 2023 after ending the alliance. The air traffic control staffing-related cancellations in New York and the shift in travel patterns to international trips this summer also weigh on the airline’s full-year outlook. “Our decision to terminate the NEA will result in a near-term drag on margins as we lose key codeshare revenue,” JetBlue CEO Robin Hayes said Tuesday. And, in addition to lost revenue, costs related to the alliance will “linger” due to the slow wind-down of the pact, he added. JetBlue and American began unwinding their alliance on July 21 when both carriers stopped taking new bookings under the pact. Many expect a so-called “drain down” end to the partnership where all existing bookings drain out of the system as no new ones are taken. The decision to end the alliance followed a federal judge’s ruling in May that found it to be in violation of U.S. antitrust law and ordered the pact terminated. American, for its part, plans to appeal the ruling. The Fort Worth, Texas-based carrier has said the end of the JetBlue alliance is not “material” on its full-year financial outlook. “As we head into 2024, we will be able to mitigate the impact as we are increasingly able to redeploy capacity currently underperforming in NEA markets to high-margin leisure opportunities throughout our network,” Hayes said on the longer-term outlook. He and other executives were not more specific on where that Boston and New York capacity could go, however, the airline is strong in large leisure markets like Florida and the Caribbean.<br/>
