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Update 8:25pm: Adds American Airlines comment.
American Airlines (NASDAQ:AAL) and JetBlue (NASDAQ:JBLU) lost a battle with Justice Department after a judge ruled that the companies have to dissolve an alliance covering flights across the northeastern U.S. JetBlue fell 1.8%, while American dropped 1.5%.
“The question before the Court is whether the NEA suppresses or promotes competition,” U.S. District Judge Leo Sorokin wrote in his decision on Friday. “The record supports only one answer. American and JetBlue, substantially diminishes competition in the domestic market for air travel. It does so by combining the Boston and New York operations of two airlines that are among the most significant competitors in that region.”
Judge Sorokin ruled on Friday that JetBlue (JBLU) and American (AAL) are permanently enjoined from continuing the Northeast Alliance, effective thirty days after the date of the order.
The trial was held in September. Six states and the District of Columbia joined the DOJ to file the antitrust lawsuit in 2021 to block a notable 2020 agreement between the two airlines to sell seats on one another’s flights along certain routes.
JetBlue (JBLU) said it’s studying the decision in full and evaluating its next steps.
“We are disappointed in the decision,” JetBlue (JBLU) said in a statement. “We made it clear at trial that the Northeast Alliance has been a huge win for customers. Through the NEA, JetBlue has been able to significantly grow in constrained northeast airports, bringing the airline’s low fares and great service to more routes than would have been possible otherwise.“
American Airlines (AAL) said it believes the decision is wrong and is considering next steps.
“The Court’s legal analysis is plainly incorrect and unprecedented for a joint venture like the Northeast Alliance,” American Airlines (AAL) said in a statement. “There was no evidence in the record of any consumer harm from the partnership, and there is no legal basis for inferring harm simply from the fact of collaboration.”
In the lawsuit, the DOJ has described the arrangement as tantamount to an unlawful merger. The direction of the trial has added significance with JetBlue (JBLU) in a $3.8B deal to buy Spirit Airlines (SAVE).
The DOJ filed an antitrust suit to block JetBlue Airways’ (JBLU) proposed merger with Spirit Airlines (SAVE) in March. The complaint alleged that the combination of the two airlines would be an adverse development for consumers, raising prices and eliminating competition.
Some have argued, include a Dealreporter story in September, that a DOJ block of the Northeast Alliance, may actually be a victory for the Spirit Airlines (SAVE) deal as as it will make the companies arguments for a merger stronger.
Spirt Airlines (SAVE) pared some of its decline on the news and ended Friday down 1.2%.
More on JetBlue/Spirit
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