American Airlines will challenge ruling that blocked JetBlue alliance

American Airlines Group Inc. plans to appeal a federal judge’s ruling that its operating alliance with JetBlue Airways Corp. violates antitrust laws and must be dismantled.

The partnership, known as the Northeast Alliance, has provided consumer benefits and strengthened competition with other airlines, American Chief Executive Officer Robert Isom said Wednesday at an industry conference in New York.

“I, quite frankly, disagree with the ruling,” he said. “We’ve got a legal system that allows for appeal and we’re going to do that.”

The ruling this month to shut down the partnership was a blow for the carriers, which have criticized the judge’s decision as “plainly incorrect” and based on no proof of harm to consumers. American and JetBlue created the partnership in 2020 to compete more effectively against Delta Air Lines Inc. and United Airlines Holdings Inc. in the New York City area and Boston.

American’s flights in the New York region, excluding routes between its hubs and those of partner airlines, is less than 5% of total capacity and loss of the alliance would not have a material impact to its earnings, Chief Financial Officer Devon May reiterated at the same event. 

JetBlue said it didn’t have an immediate comment. American and JetBlue shares were little changed in extended trading in New York.

US District Judge Leo Sorokin said in the May 19 ruling that the alliance, which allows the carriers to share routes, revenue, passengers and flight slots, “substantially” reduced competition in the domestic market. It also replaced “full-throated competition with broad cooperation” between American and JetBlue, he said. 

Sorokin blocked the airlines from further implementing the partnership, effective 30 days from the order. He set a 21-day deadline for the companies to respond.

The ruling came after the US Justice Department challenged the alliance, accusing it of being a merger in all but name that had led to higher prices.

The Justice Department’s lawsuit was the first challenge the government has brought against airlines since 2013, and is part of the agency’s renewed trust-busting efforts under Joe Biden’s administration. The department has also sued to block JetBlue’s proposed $3.8 billion merger with Spirit Airlines Inc. A trial is scheduled for October.

Also at the event, Isom said American doesn’t see full resolution of the pilot shortage at its regional carriers for another 18 to 24 months. New first officers must build 1,000 hours of flying experience before they can be promoted to captain, and the problem has left 150 regional aircraft idled. The carrier could add 2% to 3% more flying capacity at its mainline operations if not for a pilot training backlog, he said.