The controversial northeast alliance between American Airlines and JetBlue Airways, dubbed a “pseudo-merger” by some, is no more. Well, in 30 days time and pending a possible appeal. US Court for the District of Massachusetts Judge Leo Sorokin gave the US Justice Department a big win Friday and ordered the airlines to unwind their alliance, known as the NEA, within a month. He found that American and JetBlue, by entering into what is essentially a domestic joint venture, hurt consumers and eliminated competition from the Boston and New York markets. “A hallmark of a free market is the incentive to fight for revenue and customers against one’s direct competitors,” Sorokin wrote. “As between American and JetBlue, that incentive is eliminated by the NEA.” Attorney General Merrick Garland called the ruling “a win for Americans who rely on competition between airlines to travel affordably.” An American spokesperson called the ruling “incorrect,” and described the alliance as “anything but anticompetitive.” And a JetBlue spokesperson said they were “disappointed” in the decision. American and JetBlue unveiled their alliance in July 2020 amid the depths of the Covid-19 pandemic. The unprecedented pact for two U.S. domestic carriers allowed them to coordinate schedules and share revenues in Boston and New York where they both committed to grow. JetBlue essentially became a shorter-haul feeder for American in those markets, while the latter expanded its international longhaul footprint in both cities. The alliance was approved with few conditions in the waning days of the Trump administration in January 2021. The DOJ, under the Biden administration, nearly immediately took a new look at the pact and sued to block it that September. “By aligning its interests with [American], JetBlue has sacrificed a degree of its independence and weakened its status as an important ‘maverick’ competitor in the industry,” Sorokin wrote in his decision.<br/>
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Analysts paint a grim picture of the situation JetBlue Airways and American Airlines find themselves after a judge struck down their now-four-year collaboration in the Northeast USA, shortly before the peak summer travel season begins. On 19 May, federal Judge Leo Sorokin said the so-called “Northeast Alliance” (NEA) between the carriers was unlawful and violated anti-trust laws. He ordered the venture to be unravelled within 30 days. The carriers have been given 21 days to react. Industry analysts say the ruling was surprising, and its effects complicated. “We view the ruling as most negative for American, at least in the medium term, with the NEA enabling it to reallocate capacity away from marginal or unprofitable routes while still maintaining a strong presence in the Northeast,” writes Raymond James analyst Savanthi Syth. “While American will likely regain its slots leased to JetBlue, it will now have to rebuild JFK and [LaGuardia] at likely lower profitability, given its reliance on regional jets and with the lack of feed from JetBlue.” “The NEA provided [JetBlue] an opportunity to meaningfully improve its corporate position in [New York], with the investment made … unlikely to be recouped,” Syth says. JetBlue will lose the additional slots “with little ability to grow share due to slot constraints in its home market”. Analysts expect the airlines to appeal the decision, which may allow the NEA to continue through the all-important peak Northern Hemisphere summer travel season.<br/>
Qantas has revealed it expects to post a record underlying profit of up to $2.48b this financial year and increased its on-market buyback by up to $100m, as the cost of fuel, and supply chain challenges the industry has grappled with continue to moderate. The group’s quarterly market update on Tuesday said it estimates an underlying profit before tax of between $2.43b and $2.48b this financial year. The forecast is close to $1b higher than its prior record result in 2018. It comes following an increase in flying activity and the return of the airline’s fleet of wide body jets which have been stored in the desert since the onset of the COVID-19 pandemic. Qantas CE Alan Joyce said the aviation supply chain has begun to stabilise after COVID-19 and doubled down on last week’s comments about an expected lowering of airfares. “We’re able to put some of the spare aircraft and crew we kept in reserve back in the schedule. That’s combining with lower fuel prices to help put downward pressure on fares, which is good news for customers,” Joyce said. But Joyce warned there remains a sustained “mismatch” between supply and demand, particularly in international flying. This indicates airfares are likely to remain above pre-pandemic levels even if they continue to come down from their 15-year peak in December. The update said the group’s domestic capacity will exceed pre-COVID-19 levels by the end of this financial year and international capacity will reach 80% of pre-COVID levels in this period. Qantas said its local recovery was bolstered by an increase in flying between Sydney, Melbourne and Brisbane, dubbed the “Golden Triangle”, while its international capacity has been hampered by operational delays and industry staff shortages. Revenue intakes sit at 118%t of pre-COVID-19 levels across its domestic outfits and 123% for international.<br/>