American Airlines has filed a lawsuit against former Northeast Alliance (NEA) JetBlue Airways in talks to revive the alliance's fall apart.
In a recent letter to American employees, Chief Strategy Officer Steve Johnson worked on “industry rumors and media coverage” about an attempt to revive the NEA, which airlines had collaborated with to compete with Delta and United Airlines in the once busy Boston and New York Hubs.
Johnson confirms that America and JetBlue are “exploring opportunities” to revive the NEA partnership. This was dissolved following a federal judge's ruling that the partnership violated US antitrust laws. But talks have revived in recent months under a new US administration that is considered more open to integration and collusion within the airline sector.
He claims that the Americans presented “very attractive suggestions” to JetBlue.
Ultimately, we were unable to agree to a structure that maintained operationally or financially meaningful, or consistent with travel rewards and co-branded card business goals and strategies and co-branded card business goals that are very important to our customers,” Johnson said in the letter.
JetBlue executives admitted they had shopped for airline partners in February and had been discussing with “multiple airlines.” At the time, reunion with the Americans seemed like a clear possibility.
But those lectures fell apart. Now, the Americans have filed a lawsuit in the Texas Business Court seeking to “recover the amounts by the Americans” related to an income-sharing arrangement that the US alleges holds the bag.
In the lawsuit, the American says Jetblue had repeatedly failed to make payments under a revenue sharing agreement, reaching the culmination of the US invoice Jetblue for full payments by January 2024.
“But JetBlue refused to pay that amount,” says American. “And despite Americans' well-meaning efforts to resolve the parties' disputes, JetBlue continues to ignore contractual obligations.”
The lawsuit accuses the amount sought exceeds $10 million and that the terms of the NEA's dissolution demand that the settlement of outstanding debts between the companies.
I'm asking for a connection
JetBlue president Marty St. George said in a call to earnings on April 29th that the company has “made good progress in debate over domestic airline partnerships and is hoping for production at some point in the second quarter.”
When asked by analysts what such a partnership would bring to JetBlue's business, St George added that JetBlue remains engaged in negotiations with multiple carriers and is hoping to make a decision halfway before the year.
“As far as the benefits we expect to offer our customers are concerned, the most important thing is that there are very high opportunities for TrueBlue points and burn networking,” he says.
JetBlue's ideal airline partner will fill maps outside of the country's leisure network, allowing members of the loyalty program to earn points when they fly to cities such as Omaha and Boise.
“We are really excited about the overall expansion of our network opportunities, not only connectivity, but also a better opportunity for our customers to fly more places more frequently,” says St. George.
Meanwhile, Americans are pursuing their own strategies in Boston and New York without the help of JetBlue, Johnson said in a letter to airline employees.
“We are enthusiastically focused and actively competed in New York and Boston, working to strengthen our customer proposals in the Northeast,” he says.
Johnson says Americans have added around 20 routes from LaGuardia International and John F. Kennedy International Airport in New York using slots re-appointed following the breakup of the NEA.
Americans and JetBlue are under pressure to deal with unfortunate patterns of financial performance.
