By Nate Raymond (NS:) and David Shepardson
(Reuters) -A U.S. appeals court ruled on Friday that a judge correctly found that American Airlines’ (NASDAQ:) US Northeast partnership with JetBlue Airways (NASDAQ:) violated federal antitrust law.
The Boston-based 1st US Circuit Court of Appeals joined the US Justice Department in upholding a judge’s ruling that blocked the airlines’ “Northeast Alliance,” which would allow the two airlines to coordinate flights and pool revenue.
Judge William Kayatta, writing for a three-judge panel, said the trial judge had obtained “a settlement that had many of the essential features of an agreement between two powerful competitors sharing revenues and carving out highly concentrated markets.”
He said that after a non-jury trial in May 2023, the judge, Leo Sorokin, issued a ruling with “detailed factual findings, many of which were significantly unfavorable to the Americans,” and none of which were clearly legally misanalyzed.
U.S. Attorney General Merrick Garland called the ruling in a statement “a hard-fought victory for the millions of Americans who rely on competition among airlines to affordably fly, whether to visit family, vacation or business travel.” .”
Fort Worth, Texas-based American Airlines said in a statement that it disagreed with the decision and was considering options. It could either ask the 1st Circuit to reconsider the ruling or appeal to the U.S. Supreme Court.
“The Northeast Alliance was designed to increase competition and expand options for customers in the Northeast, which it clearly did during the time it was allowed to operate,” American Airlines said.
The alliance was announced in July 2020 and approved by the US Department of Transportation just days before the end of new Republican President Donald Trump’s first administration in January 2021.
The new Trump administration is expected to be much more open to mergers and partnerships than the outgoing administration of Democratic President Joe Biden, whose Justice Department filed a lawsuit with six states in September 2021 to block the alliance.
Through their partnership, American, the nation’s largest airline, and JetBlue, the sixth largest, joined forces on flights to and from New York City and Boston, coordinating flight schedules and pooling revenue.
The Justice Department argued that the alliance would harm consumers, saying the partnership removes incentives for Americans to lower prices to lure customers from JetBlue, a historically disruptive rival with often lower fares.
After Sorokin’s ruling, JetBlue terminated the alliance as it tried unsuccessfully to bolster its efforts to gain approval for its now-dropped $3.8 billion purchase Spirit Airlines (NYSE:), which was also challenged by the Department of Justice.
However, American Airlines continued with an appeal, saying the ruling would prevent the company from entering into a similar future agreement, including with JetBlue.
