US Supreme Court rejects American Airlines appeal of ruling barring JetBlue alliance

By Nate Raymond

(Reuters) -The U.S. Supreme Court rejected on Monday a request by American Airlines (NASDAQ:AAL) to overturn a judicial decision that found that the company’s now-scrapped U.S. Northeast partnership with JetBlue Airways (NASDAQ:JBLU) violated federal antitrust law.

The justices turned away an appeal by American Airlines of a lower court’s decision in a lawsuit brought by the U.S. Justice Department that led to the end of the proposed "Northeast Alliance," which would have allowed the two carriers to coordinate flights and pool revenue.

American Airlines called the Supreme Court’s decision not to take up the case disappointing. It had argued that the ruling by the Boston-based 1st U.S. Circuit Court of Appeals had wrongly embraced a hostility to collaboration between businesses and invalidated a joint venture that increased market-wide competition.

"The Northeast Alliance was designed to increase competition and expand customer options in the Northeast, which it clearly did during the time it was allowed to operate," American Airlines said in a statement.

Through their partnership, American, the nation’s largest airline, and JetBlue, the sixth-largest, joined forces for flights in and out of New York City and Boston, coordinating schedules and pooling revenue.

The 1st Circuit’s November ruling came in a lawsuit the Justice Department filed in 2021 along with six states during Democratic President Joe Biden’s administration. Under Biden, the Justice Department made boosting airline competition a top priority and aggressively enforced U.S. antitrust laws.

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Despite a change in administrations, the Justice Department under Republican President Donald Trump continued to defend the government’s victory in the American Airlines-JetBlue case.

The alliance was announced in July 2020 and approved by the U.S. Transportation Department just days before the end of Trump’s first administration in January 2021.

The Justice Department argued the alliance would hurt consumers by eliminating incentives for American to cut prices to lure customers from JetBlue, a historically disruptive rival with often lower fares.

U.S. District Judge Leo Sorokin in Boston in 2023 sided with the Justice Department and found the alliance violated antitrust law.

Following Sorokin’s ruling, JetBlue terminated the alliance, as it sought to bolster its efforts to win approval for the now-dropped $3.8-billion purchase of Spirit Airlines (OTC:SAVEQ), which Biden’s Justice Department also successfully challenged.

American Airlines, though, pressed ahead with an appeal, saying the ruling would prevent the company from entering into any similar future arrangement, including with JetBlue. But the 1st Circuit upheld Sorokin’s decision.

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