At the same time American is promising to appeal, it's downplaying the importance of the partnership, arguing that its loss wouldn't materially affect profits. Ending the alliance would likely have more of an impact on JetBlue.
American Airlines Group will appeal a U.S. court decision requiring it to end an alliance with JetBlue Airways Corp, American CEO Robert Isom said on Wednesday.
U.S. District Judge Leo Sorokin in Boston ruled on May 19 that the airlines’ “Northeast Alliance” broke antitrust law and ordered the companies to dissolve the arrangement within 30 days.
“We’ve got a legal system that allows for appeal, and we’re going to do that,” Isom told the Bernstein Conference.
JetBlue declined to comment.
The U.S. Justice Department sued in 2021 to undo the alliance announced the previous year. It called it a “de facto merger” of American and JetBlue operations in Boston and New York that removed incentives to compete and would end up costing consumers an additional $700 million a year to fly out of the region’s busy airports.
“These two powerful carriers act as one entity in the northeast, allocating markets between them and replacing full-throated competition with broad cooperation,” Sorokin wrote in his ruling, a rare court victory for President Joe Biden’s administration and its hard line against corporate consolidation.
American is the largest U.S. airline by fleet size and low-cost carrier JetBlue is the sixth largest. The airlines use the alliance to coordinate flights and pool revenue.
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Updated May. 22, 2023
Even as the Texas-based carrier prepares to appeal the ruling, Isom said it will have to work with the Justice Department and JetBlue to figure out what it does in the interim.
American, which reiterated its full-year profit forecast Wednesday, doesn’t expect the court ruling to have a material impact on its earnings.
Isom said flights out of New York accounts for less than 5% of American’s schedule.
(Reporting by Rajesh Kumar Singh in Chicago and David Shepardson and Diane Bartz in Washington; Editing by Deepa Babington and Lisa Shumaker)
This article was written by David Shepardson, Rajesh Kumar Singh and Diane Bartz from Reuters and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected].
Photo credit: An American Airlines plane taking off from Los Angeles International airport. Reuters