Texas Court Allows American Airlines' $100M Claim Against JetBlue to Proceed

A Texas Business Court has cleared the way for American Airlines (AA) to pursue its claim for more than $100 million against JetBlue Airways (B6). In a key ruling, Judge Jerry Bullard rejected JetBlue's motion to dismiss the case, marking a significant step in the financial fallout from the court-ordered dissolution of the carriers' Northeast Alliance (NEA).

The lawsuit represents the complex and contentious process of unwinding a major airline partnership following regulatory intervention. The dispute centers on financial reconciliation after the alliance was terminated, highlighting the contractual risks inherent in such agreements, particularly in an environment of heightened antitrust scrutiny from the U.S. Department of Justice (DOJ).

Background of the Dispute

American Airlines filed the lawsuit in a Texas Business Court, alleging that JetBlue has failed to make contractually required payments following the termination of the NEA. According to court filings, American is seeking damages exceeding $100 million. In a letter to employees, American Airlines' Vice Chair and Chief Strategy Officer, Steve Johnson, stated the company had “filed a lawsuit against JetBlue today to recover money owed to American following the unwinding of the Northeast Alliance.”

JetBlue has characterized the legal action as a standard part of the dissolution process. CEO Joanna Geraghty stated, “since the court order that terminated the NEA, we have been working with American to wind down the remaining aspects. This is not an unexpected turn, [it is] part of simply reconciling any monies owed between the parties.” Judge Bullard's decision not to dismiss the case means the legal proceedings will now advance, likely into a discovery phase where both airlines will be required to share information.

The Rise and Fall of the Northeast Alliance

The Northeast Alliance was first established in July 2020 as a strategic move by American and JetBlue to bolster their competitive position in the Northeast U.S. market. The partnership involved combining operations, including codesharing and reciprocal loyalty benefits, at key airports in Boston (BOS) and New York City (JFK, LGA). The stated goal was to create a more formidable competitor to Delta Air Lines and United Airlines in these critical, slot-constrained markets.

However, the collaboration quickly drew regulatory attention. In September 2021, the Department of Justice, along with six states and the District of Columbia, filed a lawsuit to block the alliance. The government argued that the NEA constituted an unreasonable restraint on trade and violated Section 1 of the Sherman Antitrust Act, ultimately reducing competition and harming consumers through higher fares and fewer choices.

A Landmark Antitrust Ruling

The DOJ's legal challenge proved successful. In May 2023, the U.S. District Court for the District of Massachusetts ruled that the NEA was illegal and ordered the airlines to terminate the agreement. Following the ruling, Attorney General Merrick B. Garland said, “Today's decision is a win for Americans who rely on competition between airlines to travel affordably.” The DOJ hailed the decision in an official statement on the court's ruling. An appeal by the airlines was later denied, with the U.S. Court of Appeals for the First Circuit affirming the lower court's decision in November 2024.

This case is part of a broader trend of increased antitrust enforcement in the aviation sector. The DOJ also successfully sued to block JetBlue's proposed merger with Spirit Airlines, signaling a clear policy shift against further consolidation and partnerships that regulators believe could diminish competition in the U.S. airline market.

Why This Matters

This legal battle underscores the significant financial and operational risks airlines face when unwinding complex partnerships that have been invalidated by regulators. The outcome of the $100 million claim will be closely watched, as it could set a precedent for how contractual obligations and financial reconciliations are handled in future dissolved alliances. For the industry, it serves as a stark reminder that the complexities of terminating a partnership can be as challenging and costly as its initial formation, particularly under the current regulatory climate.

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