Item 1.01 Entry into a Material Definitive Agreement.
Northeast Alliance Agreement. On July 15, 2020 (the “Effective Date”), JetBlue Airways Corporation (“JetBlue”) entered into a Northeast Alliance Agreement (the “NEA Agreement”) with American Airlines, Inc. (“American” and together with JetBlue, the “Carriers” and each a “Carrier”) that creates a marketing alliance (the “NEA”) designed to optimize each Carrier’s network through certain flights operated by each Carrier to and from John F. Kennedy International Airport, LaGuardia Airport, Newark Liberty International Airport and Boston Logan International Airport (collectively, the “NEA Airports”). In connection with the entry into the NEA, the Carriers have also entered into a Codeshare Agreement (the “Codeshare Agreement”) and a Mutual Growth Incentive Agreement (the “MGIA” and, together with the Codeshare Agreement and any other agreements the Carriers enter into in connection with the NEA, the “Related Agreements”), both effective as of the Effective Date.
The Carriers have agreed to use their commercially reasonable efforts to optimize services on certain routes operated by each Carrier to or from the NEA Airports, including on codeshared flights between the Carriers, to, among other things, maximize customer convenience including by minimizing connecting customer waiting time; provided that each Carrier shall maintain independent decision-making on pricing, capacity and network management. In addition, the NEA Agreement provides that the Carriers will implement sales and marketing opportunities to facilitate the delivery of improved customer benefits and consider opportunities to better utilize each Carrier’s assets at the NEA Airports.
The initial term of the NEA Agreement is seven years from the Effective Date, but, in certain circumstances, the initial term may be extended to ten years from the Effective Date, and thereafter, unless the NEA Agreement is terminated or otherwise expires in accordance with its terms, the NEA Agreement will automatically renew for successive five year terms. The NEA also includes provisions pursuant to which it can be terminated under other circumstances, in certain cases, upon payment of a substantial termination fee or, in certain circumstances, as a result of certain changes to the NEA that may be required in connection with the regulatory review process.
Codeshare Agreement. In connection with the entry into the NEA Agreement, the Carriers entered into the Codeshare Agreement. The Codeshare Agreement provides for customary provisions regarding the operation of each Carrier’s codeshared flights, which includes all routes flown by each Carrier from the NEA Airports, other than JetBlue’s future transatlantic routes. The Codeshare Agreement is non-exclusive and does not preclude either Carrier from entering into or maintaining marketing relationships, including codeshares, with other airlines; however, JetBlue is restricted from placing its code on the flights of certain large U.S. airlines, or permiting certain large U.S. airlines to place their codes on JetBlue-operated flights. These restrictions do not apply to JetBlue’s existing codeshare partners. The Codeshare Agreement will be effective as of the Effective Date, with the implementation of the Codeshare Agreement subject to a number of conditions precedent, including, among other, receipt of necessary government approvals and necessary registrations.
Mutual Growth Incentive Agreement. In connection with the entry into the NEA Agreement, the Carriers also entered into the MGIA. The MGIA provides the terms of the payments between the Carriers in connection with the transactions contemplated by the NEA The MGIA shall remain in effect so long as the NEA Agreement remains in effect and can only be terminated in accordance with the NEA Agreement.
The foregoing descriptions of the NEA Agreement, the Codeshare Agreement, and the MGIA constitute only a summary thereof and each is qualified in its entirety by reference to the text thereof, which JetBlue intends to file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Item 7.01 Regulation FD Disclosure.
JetBlue issued a press release on July 16, 2020 in connection with it entering into the NEA, Codeshare Agreement and MGIA with American. The copy of this press release is furnished herewith as Exhibit 99.1.
The information included under Item 7.01 of this report (including the exhibits) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933.