It’s been a bad few months for airline stock JetBlue (NASDAQ:JBLU). Its alliance with American Airlines (NASDAQ:AAL) faltered, and now, it closed over 7% in Thursday’s trading. Picking up the pieces, JetBlue has abandoned the partnership with American Airlines altogether and instead is focusing on adding Spirit Airlines (NYSE:SAVE) to its own ranks.
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For its part, American Airlines still plans to fight to keep the JetBlue alliance going. It already plans a lawsuit with the Department of Justice, challenging the decision that shut down the so-called “Northeast Alliance” that saw the duo work together to improve their positions in and around New England. A federal judge later called that “anticompetitive” and ordered the alliance shuttered. JetBlue disagreed but decided not to challenge it, instead focusing on an acquisition of Spirit Airlines.
American Airlines noted that JetBlue was “…a great partner…” and also vowed to “…continue to work with them to ensure our mutual customers can travel seamlessly without disruption to their travel plans.” Yet, JetBlue’s plans don’t include American now; JetBlue previously noted that its acquisition of Spirit will allow it to better compete with larger airlines. This is likely true; a combined JetBlue and Spirit would create the fifth-largest airline in the United States, putting it on a better footing to more readily compete with the top four.
Analysts, however, are skeptical. With two Hold ratings and two Sell ratings, JetBlue comes in as a Moderate Sell by analyst consensus. Worse, JetBlue stock also comes with 3.99% downside risk thanks to its average price target of $8.31.