The ruling is a blow to JetBlue, which has been trying to expand rapidly in recent years. In addition to the tie-up with American, JetBlue also has a deal to buy Spirit Airlines. The Justice Department is asking a judge to block that acquisition as well.
JetBlue is the sixth-largest airline in the U.S. with a 5.5 percent share of the domestic market, according to federal data. American is the largest with 17.6 percent.
In the lawsuit against Northeast Alliance, the Justice Department argued that JetBlue was disruptive in the industry, forcing larger, more established airlines to lower prices. JetBlue’s deal with American effectively eliminated a formidable competitor from several important markets, the department argued.
More than 75 percent of all JetBlue flights last year flew to or from the four airports under the agreement, according to flight schedules tracked by aviation data firm Sirium.
“Although the defendants claim that their greater-than-great cooperation will benefit the flying public, they have produced minimal objectively credible evidence to support that claim,” Judge Sorokin wrote. “As American and JetBlue become more powerful — regardless of their shared competitive advantages with Northeast or Delta in general — such advantages arise from a bare agreement not to compete with each other.”
The airline’s share prices fell roughly 1.5 percent on Friday, but there was little additional selling pressure in aftermarket trading following the afternoon legal ruling.
American and JetBlue have posted strong gains in market value this year, but still have a long way to go to recover from the pandemic’s devastating impact on air travel: American has lost half of its market value compared to the start of 2020. JetBlue’s stock has fallen more than 60 percent.
Antitrust regulators have argued that JetBlue’s pursuit of Northeast Alliance in a lawsuit to block its takeover of Spirit is evidence that the airline is acting more like a larger, more established carrier. The department said Spirit today is more disruptive to other airlines than JetBlue, which “has less reason to continue to aggressively compete” with the nation’s largest airlines. That case is expected to go to trial this year if it is not settled first.