Judge rejects US bid to restrict American Airlines, JetBlue deals

By Nate Raymond and David Shepardson

BOSTON/WASHINGTON (Reuters) -A federal judge on Wednesday rejected the Justice Department’s bid to restrict JetBlue Airways (NASDAQ:) and American Airlines (NASDAQ:) from entering into any partnerships with other carriers akin to their now-scrapped Northeast Alliance.

JetBlue and American Airlines are winding down their arrangement announced in 2020, in which they joined forces for flights in and out of New York City and Boston.

U.S. Judge Leo Sorokin of the District Court of Massachusetts in May sided with the Justice Department and six states in a lawsuit challenging the partnership, finding that it violated federal antitrust law.

JetBlue subsequently decided to terminate the alliance, while preparing to defend a planned $3.8 billion purchase of Spirit Airlines (NYSE:) in court in a separate Justice Department antitrust case seeking to block that deal.

While the Northeast Alliance is set to be fully wound down by January, the Justice Department has been pushing for further restrictions on the two airlines.

At a Wednesday hearing, Justice Department attorney William Jones had urged Sorokin to restrict JetBlue and American Airlines from not just reentering into a similar alliance together for the next two years but also with any other domestic air carrier.

Sorokin ruled on Wednesday “a prohibition is not necessary to achieve the appropriate aims of antitrust relief, which depend considerably on the particular circumstances of the case.”

American Airlines said it was pleased with the judge’s decision and said once Sorokin issues his final order it plans to “proceed with appealing a decision that we continue to believe misapplied the law and led to the dissolution of an alliance that delivered significant, quantifiable and durable consumer benefits.”

Jones also had urged Sorokin to order the appointment of an external antitrust compliance monitor who for the next five years would have full access to their employees, books and records to ensure compliance with the judge’s order.

Sorokin said “appointment of a monitor is unnecessary.”

Daniel Wall, a lawyer for American Airlines, called the appointment of monitor highly unusual and said restrictions on deals with other airlines was a step too far.