JetBlue Airways (JBLU:NSD) and American Airlines (AAL:NSD) will cease their partnership on Friday, July 21, following a federal court ruling in May that led to the termination of the Northeast Alliance (NEA). Although both airlines deny allegations of monopoly, they are obliged to adhere to the court ruling.
Conclusion of the Codesharing Deal:
Starting Friday, July 21, JetBlue and American Airlines will no longer sell seats on each other’s flights. The court ruling prompted JetBlue to unwind the NEA, which aimed to enhance competition in the Boston and New York regions, areas with high air traffic and passenger demand.
The codesharing agreement allowed customers to book flights on either airline, enabling more efficient management of flights in the NEA while competing against major rivals like United Airlines (UAL:NSD) and Delta Air Lines (DAL:NYE). However, the wind-down process concludes on July 20, after which customers can no longer book seats through the NEA, and loyalty benefits associated with the agreement can only be claimed until Thursday. JetBlue assures customers who have already booked tickets for the coming months that their travel schedules remain secure.
Shift in Focus and Potential Challenges:
With the termination of the partnership, JetBlue is now committed to prioritizing its $3.8 billion acquisition of ultra-low-cost carrier Spirit Airlines (SAVE:NYE), which also faces regulatory hurdles. JetBlue and American Airlines express disagreement with the federal court’s ruling, and AAL is considering contesting the decision in the near future.
JBLU Stock Analysis:
According to Stock Target Advisor, JetBlue currently holds a Sell consensus rating based on three Hold and two Sell ratings. The average JBLU stock forecast is $8.60, indicating a potential upside of 6.8% from the current level. Year-to-date, JBLU stock has seen a 23.9% increase.
AAL Stock Analysis:
As for American Airlines, the average price target stands at $17.63 on Stock Target Advisor, implying nearly 5% upside potential from the current level. AAL stock holds a Hold consensus rating based on two Buy, seven Hold, and two Sell ratings. So far this year, AAL stock has shown a gain of 42.4%.
The Takeaway:
Both JetBlue and American Airlines face evolving challenges in the wake of the NEA termination, and investors should closely monitor the airlines’ strategies moving forward.
