American Airlines says it will appeal a ruling that would break up a partnership with JetBlue
American Airlines says it will appeal a court ruling that would break up a partnership with JetBlue
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Your support makes all the difference.American Airlines said Wednesday it will appeal a court decision that would force the airline to break up its partnership with JetBlue Airways in the Northeast.
American and JetBlue face a late-June deadline to end the agreement in which they coordinate flights and share revenue. The Justice Department sued to block the alliance, and a federal judge ruled last week that the partnership violates antitrust law.
“We've got a system that allows for appeal, and we are going to do that,” American CEO Robert Isom said during an investor conference. “In the meantime, we are going to have to work with (the Justice Department), work with JetBlue, to find out exactly what we do in the interim.”
American could seek a stay of the judge's order while it appeals.
The Justice Department declined to comment.
Losing the alliance would be a setback for American, which would need to find another way to grow in New York and Boston, where it has retreated over many years in the face of competition from Delta Air Lines and United Airlines.
However, the exact cost of losing the Northeast Alliance, as the deal with JetBlue is called, is not clear. American's Chief Financial Officer Devon May said at the same Bernstein conference that the partnership's demise would not have a significant impact on the airline's operating profit margin, but he did not provide a revenue-loss figure.
U.S. District Judge Leo Sorokin in Boston ruled that with their partnership, American and JetBlue were “replacing full-throated competition with broad cooperation.” The judge dismissed the airlines' argument — which Isom repeated on Wednesday — that the deal helps consumers by creating more competition against Delta and United in New York and Boston.
Many of Isom's comments Wednesday dealt with the airline raising its second-quarter profit forecast because of higher revenue and lower fuel costs during the start of the summer travel season than it had predicted in April.
The nation's biggest airline said it expects to earn between $1.45 and $1.65 per share, or 25 cents better than its earlier forecast. The numbers exclude certain costs. American did not, however, change its financial outlook for the full year.
Savanthi Syth, an airline analyst for Raymond James, said airline revenue will be strong over summer due to vacation travel, but the fall — when business flying is a higher share of revenue — “remains in question.” Corporate travel has recovered from the pandemic more slowly than leisure travel.
Shares of American Airlines Group Inc., which is based in Forth Worth, Texas, rose 1% on Wednesday.