American Airlines is suing JetBlue to recover costs stemming from its failed Northeast Alliance with the carrier. A letter to employees leaked out confirming this news and suggesting JetBlue is pursuing another strategy, which again kindles rumors of a merger with United. Let’s unpack the memo.
JetBlue Faces Lawsuit From American Airlines Over Failed Northeast Alliance
American Airlines employees received the letter below from Vice Chair and Chief Strategy Officer Steve Johnson on Monday, April 28, 2025. I’m going to offer a running commentary as we go through the memo.
Team,
In recent months, we had been exploring an opportunity to further enhance our network by renewing a partnership with JetBlue. As always in considering partnerships, the objective was to advance our business strategy and enhance our customer proposition by building on American’s network position and giving a partner’s customers access to our global network and the world’s best loyalty program in AAdvantage.
When a federal judge blocked the “Northeast Alliance,” American Airlines appealed, while JetBlue began to pursue a merger with Spirit Airlines in earnest. With the Spirit Airlines merger also blocked, American appealed to the First Circuit Court of Appeals, which affirmed the District Court ruling. Now, AA has petitioned the US Supreme Court to vacate the ruling and allow the Northeast Alliance to proceed, though JetBlue no longer wants it.
Although we proposed a very attractive proposition to JetBlue and its customers and team, it became clear over time that JetBlue was focused on 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.
What are those different business priorities? Remember, it’s not just American Airlines that is struggling in the highly competitive New York City market: it is JetBlue too…a carrier whose very business model is under question, underperforming its peers for so long. The memo suggests loyalty was at play (American Airlines loses money flying airplanes but reports handsome profit margins from its AAdvtanage loyalty program), but I wonder if JetBlue is now actively looking to other potential partners, a topic I address more below.
Looking ahead: 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. Over the past year, we have added more than 20 new routes from LGA and JFK using the slots returned to us after the NEA ended. Together with our partners, this summer we will offer New York travelers more than 250 daily nonstop flights to 100 markets around the world – from two exceptional terminal facilities, including the best lounges in our system. At JFK, we continue to improve connectivity by co-locating at T8 with our partners, including British Airways, Iberia, JAL, Qatar, and, as we recently announced, Alaska and Hawaiian.
There’s no doubt that AA is making an effort and has finally woken up and realized that with its high cost structure, it must try to mimic the premium path that Delta Air Lines and United Airlines have taken. Even so, it’s a little puzzling AA chooses to use its valuable JFK slots to operate so many shorthaul flights when both Delta (at JFK) and United (at Newark) offer so many more intercontinental routes.
The continued growth in AAdvantage enrollments in the region makes us confident that the New York market is sufficiently large and lucrative to support and value multiple competing networks. And of course, New York is a key business and leisure travel market for customers around the system, so we will also continue to optimize the “halo” effect for our network by providing convenient schedules to New York for travelers who live in cities throughout the U.S. and around the world.
Just a small note here that as Delta SkyMiles and United MileagePlus have devalued, American AAdvantage has grown even more valuable…AA would be very foolish to eliminate this comparative advantage it now enjoys, especially when–by all indicators–its AAdvantage program is so profitable.
We are proud to connect customers to more than 1,000 destinations around the globe, with an outstanding group of partners who share our belief that alliances are meant to provide customers with the experience they deserve and benefits they prefer. We will continue to build American’s network organically and through growth and investment in these partnerships.
AA says “alliances are meant to provide customers with the experience they deserve and benefits they prefer,” which seems to be a dig at JetBlue, though a Northeast Alliance certainly led to upgraded benefits and experiences for flyers in both the front and back of the aircraft when traveling on JetBlue (more legroom, seatback screens, free internet, friendly service, mutual elite benefits).
One final note, in case you see it in the news. We filed a lawsuit against JetBlue today to recover money owed to American following the unwinding of the Northeast Alliance. We understandably tabled this claim while we were in discussions with JetBlue, but now that those conversations have concluded, we need to address the accounting and reconciliation following the termination of the NEA.
Thank you for your help as we continue this important work.
Steve
I’ll review this lawsuit and offer my thoughts: it is isn’t clear on what grounds American Airlines is suing JetBlue, though I would imagine it has to do with JetBlue essentially abandoning the partnership after the adverse legal ruling, which AA saw as an erroneous ruling and perhaps, as it pertains to the contract verbiage with JetBlue, a contractual violation.
Why Would JetBlue Turn Down A Northeast Alliance Version 2.0?
I may be off-base, but I think all of this is pointing to a JetBlue merger acquisition by United Airlines. There must be a reason that United CEO Scott Kirby so carefully heaps praise on President Trump’s tariff policy when such tariffs threaten to devastate United’s niche as the “flag carrier” of the United States (that’s a self-label).
As United tries to claw back into New York JFK, the JetBlue slots at JFK as well its strength in Florida and the Northeast, offer a complementary route network that make the two work cultures the biggest hurdle to overcome with a president in the White House who embraces not only the untiary executive theory, but a top-down leadership model, as do his lieutenants runing the Department of Justice and the Department of Transportation, meaning it’s President Trump’s decision…
(The United-JetBlue marriage is something I’ve written about as far back as 2017)
> Read More: United Airlines Fuels More Speculation After “Denial” Of Merger Talks With JetBlue
Inside Baseball
A noteworthy side story. The “inside baseball” going on here is that JonNYC leaked details from this note yesterday afternoon (and eventually the full note), which forced American Airlines to issue a public statement at 6:30 pm as the media picked up on this letter. AA then took the unusual step of publishing the entire letter that I’ve analyzed above.
AA: "Recent talks to partner with B6 have gone kaput, so AA is on its own in NY for foreseeable future"(AA related, not an official quote -from- AA)
Kudos to JonNYC for his many scoops…
CONCLUSION
American Airlines has filed a lawsuit against JetBlue to recover costs relating to the failed Northeast Alliance. The curious thing to me is why JetBlue would not want to rekindle this mutually-beneficial relationship with AA and my guess is that JetBlue is hoping for something better. Whatever that is, it isn’t Spirit Airlines and if it isn’t American Airlines, you have to wonder if talks with United Airlines are going on behind the scenes.
I would assume without knowing the exact details of the original agreement in regards to regulatory problems it’s speculation if JetBlue can sign another agreement with United. Was there a time limit on closing the deal? Could JB walk away in this situation, which had to be a consideration based on the environment at the time. If there is any ambiguity, it’s a legal nightmare and a lawyers delight. Imagine the chaos if the Supreme Court overturns the original rulings after JetBlue signed another deal.
Without making this political (what isn’t anymore?) this again shows the anti business stance of the past 4 years will resonate for years to come.
Hey Matthew Klint,…find a different hobby…stop spreading lies and useless information that is true! ♀️
That’s quite profound, Jace…
“which AA saw as an erroneous ruling and perhaps, as it pertains to the contract verbiage with JetBlue, a contractual violation.”
It’s been a couple years since I reviewed the contract docs in the suit, but I believe the issue is the contract allows for no-fee termination if the courts deemed it illegal, but it didn’t go so far as to say that the parties must exhaust all avenues. It’ll probably be a question of “a court deemed it illegal, is that enough or should JetBlue have persued the appeal as there was a chance it could have been reversed?”
As I mentioned, it has been a couple years so take my thought with a grain of sale. The filings are out there with the contracts available for the public if you wanted to invest more time than I’m willing to currently do.
Jetblue just announced they will soon announce a partnership with another airline (cough, United, cough)
will you be surprised if it is Southwest?
WN’s new model is much more like B6′ than any of the big 4.
WN doesn’t fly to Europe so is no threat to B6′ desire to fly to Europe.
WN does fly to Hawaii and much of the western US
and WN is by far the smallest of the big 4 in NYC and north.
WN and B6 could even do a revenue sharing deal and it would run into none of the antitrust problems that would exist for either AA or UA.
UA just might be stuck over at EWR while DL will “just” have to keep picking off AA’s high value passengers in the SE, NYC and LAX
either way, any partnership other than AA makes AA’s prospects much less rosy
I would be surprised, but your theory is reasonable, especially with pressure from Elliott.
One thing is certain: whether it is WN, AA, or UA, I do not see an independent future for B6.
very surprised
southworst still refuses first class. That purchase of Air Tram (where they easily could have kept first class) is a massive boondoggle. Not to mention they could have bought United rather easily as well, just as Texas International DBA Continental did
B6 doesn’t have first class except on its transcons.
B6 and WN will have very similar products and very complimentary networks.
Let’s see what plays out but B6 and WN might be able to do more for each other without one or the other paying a high price which is exactly what would happen if B6 did a deal with UA.
I bet Jetblue is now evaluating whether UAL or Southwest is a better co-share partner and potentially future merger partner.
Given Jetblue has talked about adding J on all planes, it won’t be WN
This is either an outright purchase by UA OR they are having some type of codeshare with UA and are joining *A