American Airlines will appeal a recent court ruling that requires it to dismantle its Northeast Alliance (NEA) with JetBlue.
Speaking at the Bernstein 39th Annual Strategic Decisions Conference on May 31, 2023, the chief executive officer (CEO) of American Airlines, Robert Isom, said that since the legal system allows appeals, “we are going to do that”.
“I think the benefits that we proposed [in the alliance] will ultimately prevail,” Isom continued. “But in the meantime, yes, we’re going to have to work with the DOJ [Department of Justice – ed. note], work with JetBlue to find out exactly what we do in the interim, and we’re going to do that.”
Interestingly, speaking at the same conference, Devon May, chief financial officer (CFO) of American Airlines, said that while the NEA is big for New York and for the airline, “it isn’t something that is really impactful to earnings because our non-hub flying out of New York is something less than or around 5% of our total system capacity”.
“We upped our guidance for the second quarter. And so yes, for this year, we don’t expect this to be material impact to earnings,” May added.
So far, JetBlue has not issued a public statement on its website or to its investors about whether the airline will appeal the decision.
The airline has previously stated that it is “disappointed in the decision”.
“We made it clear at trial that the Northeast Alliance has been a huge win for customers,” JetBlue said on May 22, 2023, after US District Court for the District of Massachusetts Judge Leo Sorokin ruled against the NEA on May 19, 2023.
According to Sorokin’s ruling, the alliance “operating as it was designed and intended by American and JetBlue, substantially diminishes competition in the domestic market for air travel”. The judge gave the carriers 30 days to dismantle the alliance following his argument that neither of the airlines had presented evidence against the claim that the NEA “plainly violates Section 1 of the Sherman Act”.
