The NEA, which focuses on Boston and the New York City regions, was first announced in 2020. It hoped to improve AA’s presence in the northeast which currently contributes around 5% to its non-hub capacity. The deal would also allow both to better compete with rivals Delta Air Lines (DL) and United Airlines (UA).
However, in September 2021, the US government sued both airlines, claiming that instead of increasing choice for customers, the alliance would reduce competition and end up costing passengers more to travel from the region.
30-Days to End Partnership
On May 19, US District Judge Leo Sorokin ruled against the tie-up, claiming it broke antitrust laws, and ordered the carriers to dissolve the partnership within 30 days. In his ruling, Sorokin claimed, “These two powerful carriers act as one entity in the northeast, allocating markets between them and replacing full-throated competition with broad cooperation.”
AA’s CEO Robert Isom said they will now move forward with an appeal to the decision. Both carriers are currently looking at how they can work through the finding while working with the Department of Justice (DOJ) to reach a suitable conclusion that will benefit all parties.
On Wednesday, May 31, AA reiterated its full year-profit forecast and claimed the ruling would not impact its predicted earnings.
Featured Image: N838AW American Airlines Airbus A319 (America West Heritage Livery). Photo: Tony Bordelais/Airways.