American Airlines and JetBlue Airways have been ordered by a U.S. court to end their Northeast Alliance, which allows them to coordinate flights and pool revenue. American CEO Robert Isom said the company will appeal the ruling, but it will also have to work with the Justice Department and JetBlue to figure out what to do in the interim. American doesn't expect the ruling to have a material impact on its earnings, as flights out of New York account for less than 5% of its schedule.
The Justice Department sued to block the alliance in 2021, arguing that it would reduce competition and raise prices for consumers. The court agreed, finding that the alliance "eliminates competition between American and JetBlue in Boston and New York, and replaces it with broad cooperation."
The ruling is a victory for President Biden's administration, which has taken a hard line against corporate consolidation. It is also a setback for American and JetBlue, which had hoped to use the alliance to compete more effectively with larger rivals like United Airlines and Delta Air Lines.
It remains to be seen whether American will be successful in its appeal. If the ruling is upheld, it could have a significant impact on the airline industry, as it would make it more difficult for airlines to cooperate and compete on price.