Update 8:25 p.m.: Adds a comment from American Airlines.
American Airlines (NASDAQ:AAL) and JetBlue (NASDAQ:JBLU) lost a battle with the Department of Justice after a judge ruled the companies should disband an alliance covering flights across the northeast US JetBlue fell 1.8%while America fell 1.5%.
“The question before the court is whether the NEA suppresses or promotes competition,” said U.S. District Judge Leo Soroki.n writes in its decision Friday. “The case only supports one answer. American and JetBlue, significantly lessen competition in the domestic airline market. It does so by combining the Boston and New York operations of two airlines that are among the most important competitors in this region.”
Judge Sorokin ruled on Friday that JetBlue (JBLU) and American (AAL) are permanently ordered to sue the North East Alliance, effective thirty days after the date of the order.
The trial was place in September. Six states and the District of Columbia joined the DOJ in filing an antitrust lawsuit in 2021 to block a notable 2020 deal between the two airlines to sell seats on each other’s flights on certain routes.
JetBlue (JBLU) said it was studying the decision in its entirety and evaluating its next steps.
“We are disappointed with the decision,” said JetBlue (JBLU) said in a statement. “We made it clear during the trial that the Northeast Alliance was a huge win for customers. Thanks to the NEA, JetBlue has been able to expand significantly into constrained Northeast airports, bringing the low fares and great service from the airline to more routes than they would have been possible otherwise.“
American Airlines (AAL) said he believed the decision was wrong and was considering next steps.
“The court’s legal analysis is patently incorrect and unprecedented for a joint venture like the Northeast Alliance,” American Airlines said (AAL) said in a statement. “There was no evidence on the record of any harm caused to the consumer by the partnership, and there is no legal basis for inferring harm simply from the collaboration.”
In the lawsuit, the DOJ described the arrangement as amounting to an illegal merger. The direction of the test has additional significance with JetBlue (JBLU) in a $3.8 billion deal to buy Spirit Airlines (TO SAFEGUARD).
The DOJ filed an antitrust complaint to block JetBlue Airways (JBLU) proposed merger with Spirit Airlines (TO SAFEGUARD) in March. The complaint alleged that the combination of the two airlines would be an unfavorable development for consumersby raising prices and eliminating competition.
Some have argued, including a Dealreporter article in September, that a Northeast Alliance DOJ block could actually be a win for Spirit Airlines (TO SAFEGUARD) treat as he will strengthen the companies’ case for a merger.
Spirit Airlines (TO SAFEGUARD) pared some of its decline on the news and ended Friday down 1.2%.