U.S. urges judge to curb future American Airlines, JetBlue deals

By Nate Raymond

BOSTON (Reuters) – The U.S. Department of Justice on Wednesday urged a judge to restrict JetBlue Airways (NASDAQ:) and American Airlines (NASDAQ:) from entering into any partnerships with other carriers akin to their now-scrapped Northeast Alliance, which the judge deemed anticompetitive.

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. District Judge Leo Sorokin in Boston 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 companies.

At a Wednesday hearing, Justice Department attorney William Jones 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 airline.

“We think by prohibiting these deals we are protecting against a recurrence of this in a slightly different form,” he said.

Jones also 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.

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.

“Respectfully, we think they are asking you to do something beyond the authority of the court,” Wall said.

Sorokin also appeared skeptical, noting that his decision had focused on a particular “facts and circumstances.” He said he planned a “very fast” ruling on the Justice Department’s demands.

(This story has been refiled to correct the date of hearing from Tuesday to Wednesday in paragraph 6)