American Airlines Group Inc. won’t change its guidance for the year or its immediate plans for flying capacity in the New York market after a federal judge ruled a partnership with JetBlue Airways Corp. violates antitrust laws and must be dismantled.
(Bloomberg) — American Airlines Group Inc. won’t change its guidance for the year or its immediate plans for flying capacity in the New York market after a federal judge ruled a partnership with JetBlue Airways Corp. violates antitrust laws and must be dismantled.
“While this is a big decision and it has potential impact to New York, it is not meaningful to our earnings projections,” Chief Financial Officer Devon May said Thursday at a Wolfe Research conference in New York.
A federal judge ruled on May 19 that American’s Northeast Alliance with JetBlue, which allows the two airlines to share routes, passengers and flight slots in the US Northeast, “substantially” reduced competition in the domestic market. US District Judge Leo Sorokin in Boston blocked the airlines from further implementing the partnership, effective 30 days from the order.
Sorokin’s decision came after the US Justice Department challenged the alliance, accusing it of being a merger in all but name.
The ruling was a blow to both carriers, which fashioned the Northeast Alliance in 2020 to compete more effectively against Delta Air Lines Inc. and United Airlines Holdings Inc. in the New York City area and Boston. JetBlue has expanded flying in the area under the partnership, in part by using scarce flying rights held by American at New York’s LaGuardia Airport.
American said last year that much of its growth in New York involved long-haul flights under partnerships with international carriers like British Airways Plc and Qatar Airways QCSC. New York capacity, excluding flights between New York and its hub airports or those of partners, is about 5% of American’s total, May said.
Shares rose 1.4% at 11:46 a.m. in New York. American’s stock has risen 8.5% this year through Wednesday’s close, the second best performance in a Standard & Poor’s index of the five largest US carriers.
The airline earlier criticized Sorokin’s ruling as wrong, and said there was no evidence of harm to consumers from the partnership, which JetBlue called a “huge win” for travelers. Both companies said they were evaluating next actions.
American is maintaining its capacity plans for the New York area for the short term, May said, and the ruling won’t affect customers traveling on the carrier this summer.
The US Justice Department lawsuit over the NEA was the first government antitrust challenge against airlines since 2013, and is part of the agency’s renewed trust-busting efforts under President 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.
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