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JetBlue to cut routes and leave two cities after its Spirit Airlines merger failed

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In an attempt to reduce expenses following the collapse of its $3.8 billion merger with low-cost airline Spirit Airlines, JetBlue Airways is planning to discontinue several unprofitable routes to both local and foreign locations.

The operator, based in Long Island City, New York, will reduce its number of flights from Los Angeles International Airport by nearly one-third starting in June. According to Bloomberg News, which broke the story first, it includes flights to Miami, Las Vegas, and San Francisco.

Airline routes between Detroit and John F. Kennedy International Airport in New York, as well as flights from Fort Lauderdale, Florida, to five destinations (New Orleans, Nashville, Salt Lake City, and so on), will be discontinued.

On June 13, Jetblue will entirely withdraw from Lima, Peru; Kansas City, Missouri; Newburgh, New York; Bogotá, Colombia; and Quito, Ecuador.

According to a memo sent to staff on Tuesday, Dave Jehn, Vice President of Network Planning and Airline Partnerships at JetBlue, “every route has to earn its right to stay in the network, more than ever, with less aircraft time available and the need to improve our financial performance.” “We need to be more meticulous than ever about each route in our network.”

The modifications will not only save money but also assist the airline in managing the grounding of certain of its aircraft for Pratt & Whitney engine inspections.

According to JetBlue Chief Financial Officer Ursula Hurley, the airline will have, at most, 12 to 15 aircraft idle for nearly a full year, she said on February 22 at an investor conference.

Only a few weeks have passed since JetBlue declared it would not be appealing a federal judge’s decision to reject its proposed merger with Spirit. The agreement would have combined the sixth and seventh-largest airlines in the country. Also, it would have made JetBlue more competitive against its bigger rivals.

Following a 3% decline following the market’s closing on Tuesday, JetBlue’s stock fell 1% in premarket trading on Wednesday.

As per the terms of their agreement, JetBlue would reimburse Spirit $69 million and settle any unresolved issues about the transaction, including the appeal. According to the airline, Spirit stockholders received prepayments totaling around $425 million during the period of the merger agreement.

In recent years, JetBlue’s operations have failed and the airline has been losing money. Its problems have also made it vulnerable to a public activist shareholder campaign by Carl Icahn, who last year successfully opposed Illumina’s acquisition of Grail, a manufacturer of cancer tests.

Icahn acquired two seats on JetBlue’s board of directors in addition to taking a 10% ownership in the business.

JetBlue stated in January that it anticipates a 5%–9% decline in revenue and a 6% decrease in capacity for the first quarter of 2024. In addition, the carrier announced a $104 million financial loss for the final three months of 2023 as opposed to a $24 million profit in the same period the previous year.

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