American Airlines will appeal the court ruling that requires it to dissolve its so-called “Northeast Alliance” (NEA) with JetBlue Airways.
Earlier this month, a US federal judge struck down the almost four-year collaboration between the two carriers after the US Department of Justice (DOJ) sued to stop the project. Judge Leo Sorokin said the NEA violated an anti-trust law, and ordered it to be permanently unravelled within 30 days. That window closes on 19 June. The companies have until 9 June to officially react to the decision.
“We were sued by the DOJ and the judge’s ruling said the NEA can’t go forward,” American’s chief executive Robert Isom told investors at a conference on 31 May. “We have a system that allows for appeal, and we are going to do that.”
“I’m disappointed and quite frankly disagree with the ruling,” he says. “At the end of the day the reason [for the alliance] was to provide stronger competition in an area that could use it. The NEA was a creative way to take a look at that problem, strengthen our position and offer our customers more options, more cities and a level of competition that wasn’t there previously.”
JetBlue did not immediately respond to a request for comment.
The two carriers unveiled their “strategic partnership” in the northeastern USA, focused on Boston and New York City, in mid-2020. It was designed to even the playing field to compete with United Airlines and Delta Air Lines, which have larger presences at airports in both metropolitan areas.
The US government sued the carriers in September 2021, claiming the collaboration – which proposed operating codeshare flights and offering reciprocal frequent flier benefits – stifled competition in those markets. The suit claimed the partnership gave American too much sway over JetBlue, threatening the latter’s ability to remain a successful low-fare counterweight in an industry that has significantly consolidated, and that the deal represented a de-facto merger in the region.
Attorney generals in six states and the District of Columbia had joined the DOJ as plaintiffs.
Now, Isom says, American is “going to have to work with the DOJ and work with JetBlue to find out what we do in the interim”.
“A lot of work on that is going on right now,” he says.
Earlier this month, the Fort Worth-based carrier’s chief financial officer Devon May said the dissolution of the collaboration had no “material” impact on earnings, since the project comprised only about 5% of the airline’s total non-hub capacity. Isom reiterates that statement. “For this year, it’s not a material impact on earnings,” he tells the investors.
But, he says, he is still convinced that the Northeast Alliance was doing exactly what it was designed to do - increasing competition and allowing customers a broader array of choices from Boston and the New York City - and the carrier will continue to fight for it.
“We entered into it for all the right reasons, and it was producing all the right benefits,” he says.
