American Airlines
is set to appeal a court ruling ordering the carrier to end its partnership with
JetBlue Airways
in the Northeast of the U.S.
The airline’s CEO Robert Isom said it intends to appeal last month’s decision, which required it to unwind the alliance in just 30 days. The timing, as the peak summer season begins, couldn’t have been worse.
“Look, we’ve got a legal system that allows for appeal and we’re going to do that,” Isom said at a Bernstein conference Wednesday.
The carriers’ alliance in the New York and Boston areas has been running for more than two years, and involves the pair sharing takeoff and landing slots at four airports in the Northeast. They also code-share on 175 routes, which is where one airline can market and sell another’s flights as its own. And they share revenue generated through the alliance.
But a federal judge ruled last month that the tie-up “substantially diminishes competition” in the domestic market for air travel. It was a win for the Department of Justice (DOJ), which sued to block the partnership in September 2021.
It’s still unclear what an appeal would mean for the 30-day order. “In the meantime, we’re going to have to work with the DOJ, work with JetBlue to find out exactly what we do in the interim,” Isom added.
American (ticker: AAL) hiked its second-quarter profit guidance in a filing Wednesday, citing continued strong demand and lower fuel costs. It also stuck to its full-year earnings guidance of $2.50 to $3.50 per share.
Chief Financial Officer Devon May said he doesn’t expect the Northeast Alliance ruling to have a material impact to earnings. “With our New York strategy, it isn’t something that is really impactful to earnings because our non-hub flying out of New York is something less than around 5% of our total system capacity,” he said at the Bernstein conference.
JetBlue (JBLU) did not immediately respond to a request for comment early Thursday.
Write to Callum Keown at callum.keown@barrons.com
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