AMR, JetBlue enter partnership in New York, Boston

NEW YORK/CHICAGO (Reuters) - JetBlue Airways Corp passengers will be able to connect with one ticket to American Airlines' international flights from New York and Boston under a partnership the two carriers announced on Wednesday.

The deal will provide connections for more passengers at New York's John F. Kennedy International Airport and Boston's Logan International Airport to American's international destinations in Europe, Asia and South America.

The partnership, the first of its kind between American parent AMR and JetBlue, could spark new competition among major carriers on East Coast routes as demand for business travel improves after the recession. It also could pave the way for more cooperation between the two airlines.

Speaking at the American Airlines Theater in New York, the chief executive officers of both companies said the partnership was probably only the beginning of a deeper relationship. They did not rule out JetBlue's entry to AMR's oneworld alliance of airlines.

"Our teams are really open to the path forward, whatever that may be, as we take a look at collaboration and partnership," JetBlue CEO Dave Barger said.

AMR CEO Gerard Arpey said JetBlue fit well with the carriers that are members of oneworld.

"Who knows where the path leads?" Arpey said. "But I think the JetBlue brand stands very proud among that group of carriers." He later noted he had never flown on a JetBlue plane.

Starting in the second quarter, AMR will sell tickets for some JetBlue flights on its website. JetBlue eventually will sell American Airlines tickets as well.

"At first blush, it looks like AMR is expanding capacity in the smaller markets without incurring the costs of adding new flights," said Morningstar equity analyst Basili Alukos. "Using this agreement -- effectively a code-sharing agreement -- offers a cheap alternative.

"I also think that the move suggests business travel is improving in New York, and that AMR wants to bolster its position before things start to improve more," he said.

Under the deal, American will transfer eight slot pairs at Ronald Reagan National Airport outside Washington and one slot pair at White Plains, New York, to JetBlue, which will transfer 12 slot pairs at New York's JFK to American.

"I think the DCA (Reagan National) slots will result in new nonstop service to Boston by JetBlue and a direct challenge to US Airways in the market," said airline consultant Doug Abbey.

Abbey said the deal positioned JetBlue to become a dominant carrier in one of the country's most attractive business markets.

"With service currently from Logan to Dulles and BWI, JetBlue will be the only carrier operating its own metal to all three D.C. area airports," Abbey said.

The move would also position American to compete more in New York with industry leader Delta Air Lines, which has ramped up service in recent years with new international flights at JFK and more activity at LaGuardia.

Earlier this year, Delta lost a fierce battle to lure bankrupt Japan Airlines into its SkyTeam alliance from American's oneworld.

Shares of AMR were up 2.7 percent at $9.18 on the New York Stock Exchange, while JetBlue rose 2.7 percent to $5.65 on Nasdaq.

(Reporting by Kyle Peterson and Ernest Scheyder, editing by Gerald E. McCormick, Dave Zimmerman and Lisa Von Ahn)