Moderators: richierich, ua900, PanAm_DC10, hOMSaR

 
User avatar
LAXintl
Topic Author
Posts: 26926
Joined: Wed May 24, 2000 12:12 pm

AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 4:48 pm

With the bench trial is set to commence on September 27 before U.S. District Court in Massachusetts, I thought we could have a consolidated thread covering Northeast Alliance (NEA) case and avoid the need for cross-posting in the AA and JetBlue threads.

As background, the DOJ and six states last year sued American Airlines and JetBlue Airways to stop their network and frequent flyer partnership on antitrust grounds with claims the NEA reduces competition through anti-competitive behavior and amounts to a de facto merger between American and JetBlue in markets from Boston and New York City.

Link to DOJ complaint:
https://www.justice.gov/opa/press-relea ... 1/download

=
 
TYWoolman
Posts: 1402
Joined: Sat Jun 24, 2017 8:24 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 7:55 pm

In a nut shell...two airlines that rigorously compete against each other don't form an alliance. And two airlines that do form an alliance will have embarked on an inevitable downhill trend to compete less and less with each other all the while distorting the competitive dynamic for the remaining players that in turn must operate under their own limitations absent comparatively similar strategic options.

AA has had an illustrious history in NY and has set precedent for itself that it can hold its own. The NEA is a defector merger, allowing AA to utilize a lower-cost model in certain markets only to be able to dump capacity elsewhere. B6 has also proven success in NY and is poised to gain more slots with NK. Should be a no-go.
 
maverick4002
Posts: 608
Joined: Sun Jul 12, 2015 2:14 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 7:56 pm

Good idea but thats 12 days away. A bit early for the thread, no? You will likely need to bump this again.
 
TYWoolman
Posts: 1402
Joined: Sat Jun 24, 2017 8:24 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 8:04 pm

And good idea about the thread! Never too early for legitimate analysis and interpretation of an extremely important topic that furthers consolidation under the guise of an alliance.
 
enterusername
Posts: 51
Joined: Tue Mar 08, 2022 5:48 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 8:08 pm

TYWoolman wrote:
In a nut shell...two airlines that rigorously compete against each other don't form an alliance. And two airlines that do form an alliance will have embarked on an inevitable downhill trend to compete less and less with each other all the while distorting the competitive dynamic for the remaining players that in turn must operate under their own limitations absent comparatively similar strategic options.

AA has had an illustrious history in NY and has set precedent for itself that it can hold its own. The NEA is a defector merger, allowing AA to utilize a lower-cost model in certain markets only to be able to dump capacity elsewhere. B6 has also proven success in NY and is poised to gain more slots with NK. Should be a no-go.


Not at all. AA and their US Airways brethren realized they cant compete in NYC. AA was a bit player after the late 90s pulldown of JFK and the post merger airline was a fraction of the size of UA, B6 or DL.

Let's face it, AA + B6 is still a distant 3rd in NYC scope, but at least they are relevant in size compared to UA/DL. B6 nor AA can be anywhere near competitive in size vs UA/DL separately.
 
MIflyer12
Posts: 11783
Joined: Mon Feb 18, 2013 11:58 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 9:50 pm

Is there really anything to say until a verdict is reached, or a pre-verdict settlement is reached? The DOJ chose to sue (unlike DL/WS) and AA/B6 chose to go to trial rather than modify the agreement and reach a settlement.
 
HunterATL
Posts: 181
Joined: Sat Apr 08, 2017 3:15 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 9:52 pm

MIflyer12 wrote:
Is there really anything to say until a verdict is reached, or a pre-verdict settlement is reached? The DOJ chose to sue (unlike DL/WS) and AA/B6 chose to go to trial rather than modify the agreement and reach a settlement.


There will be no verdict. It's a bench trial.
 
DLPMMM
Posts: 2378
Joined: Wed Apr 20, 2005 12:34 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 10:47 pm

HunterATL wrote:
MIflyer12 wrote:
Is there really anything to say until a verdict is reached, or a pre-verdict settlement is reached? The DOJ chose to sue (unlike DL/WS) and AA/B6 chose to go to trial rather than modify the agreement and reach a settlement.


There will be no verdict. It's a bench trial.


There will be a verdict.
It will be given by the judge.
That is how a bench trial works.
There is no jury.
 
HunterATL
Posts: 181
Joined: Sat Apr 08, 2017 3:15 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 10:51 pm

LAXintl wrote:
With the bench trial is set to commence on September 27 before U.S. District Court in Massachusetts, I thought we could have a consolidated thread covering Northeast Alliance (NEA) case and avoid the need for cross-posting in the AA and JetBlue threads.

As background, the DOJ and six states last year sued American Airlines and JetBlue Airways to stop their network and frequent flyer partnership on antitrust grounds with claims the NEA reduces competition through anti-competitive behavior and amounts to a de facto merger between American and JetBlue in markets from Boston and New York City.

Link to DOJ complaint:
https://www.justice.gov/opa/press-relea ... 1/download

=


If you don't have a PACER account, this site will provide you access to the docket and some of the relevant motions, briefs, and orders (many entries can only be purchased from PACER but most of the pre-trial filings are available): https://www.courtlistener.com/docket/60 ... group-inc/.

Docket entries 160 and 162 layout the pre-trial positions of the plaintiffs and the defendants. If you really care to know the procedures for the trial, who the potential witnesses will be, the uncontested facts, the exhibit lists, etc., the proposed joint pre-trial order is docket entry 157. The final pre-trial conference is set for September 19, so there will likely be some additional docket entries on that date or shortly thereafter.

In addition to the pre-trial briefs, the recently filed Daubert motions and motions in limine and corresponding briefs shed further light on the parties' views. Briefing for those motions was completed on September 14, and those motions are now under advisement.
 
HunterATL
Posts: 181
Joined: Sat Apr 08, 2017 3:15 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 10:53 pm

DLPMMM wrote:
HunterATL wrote:
MIflyer12 wrote:
Is there really anything to say until a verdict is reached, or a pre-verdict settlement is reached? The DOJ chose to sue (unlike DL/WS) and AA/B6 chose to go to trial rather than modify the agreement and reach a settlement.


There will be no verdict. It's a bench trial.


There will be a verdict.
It will be given by the judge.
That is how a bench trial works.
There is no jury.


Under the Federal Rules of Civil Procedure, juries issue verdicts and judges issue judgments. Because there is no jury, there will be no verdict.
 
capejet
Posts: 244
Joined: Sun Sep 02, 2012 9:08 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 11:07 pm

Anyone know anything about the Judge in this case? What kind of decisions he/she has issued in the past? Might hold the key.
 
santi319
Posts: 1494
Joined: Thu Dec 29, 2005 3:24 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 11:12 pm

As I expected, JetBlue said not as committed to NEA, and this may help smooth approval for Spirit Airlines deal.

It was obvious as they are bound to become a major player in the country, they don’t really need AA, they just couldn’t say it before as they had a chance of losing the votes for NK, but it was obvious that this major expansion superseded any interest in codesharing at 3 airports with a subpar player.


https://seekingalpha.com/news/3883183-jetblue-said-not-as-committed-to-nea-may-help-smooth-approval-for-spirit-airlines-deal
 
HunterATL
Posts: 181
Joined: Sat Apr 08, 2017 3:15 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 11:19 pm

capejet wrote:
Anyone know anything about the Judge in this case? What kind of decisions he/she has issued in the past? Might hold the key.


Obama appointed Leo Theodore Sorokin in 2014, and the Senate confirmed him in June of that year with no votes opposed. He previously served as a magistrate judge for D.Mass., a federal public defender, and an assistant attorney general for Mass. among other jobs. I know nothing about his antitrust background or any previous antitrust cases on which he worked as a lawyer or adjudicated as a judge, but I no longer have a Westlaw or Lexis account which makes tracking down opinions or judgments he may have entered in antitrust cases difficult to find.
 
TYWoolman
Posts: 1402
Joined: Sat Jun 24, 2017 8:24 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 11:35 pm

santi319 wrote:
As I expected, JetBlue said not as committed to NEA, and this may help smooth approval for Spirit Airlines deal.

It was obvious as they are bound to become a major player in the country, they don’t really need AA, they just couldn’t say it before as they had a chance of losing the votes for NK, but it was obvious that this major expansion superseded any interest in codesharing at 3 airports with a subpar player.


https://seekingalpha.com/news/3883183-jetblue-said-not-as-committed-to-nea-may-help-smooth-approval-for-spirit-airlines-deal


Then no wonder AA recently touted/ assauged investors it has over 100 aircraft ready to deploy! And perhaps why Delta wants to hurry LGA completion.
 
HunterATL
Posts: 181
Joined: Sat Apr 08, 2017 3:15 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Thu Sep 15, 2022 11:44 pm

santi319 wrote:
As I expected, JetBlue said not as committed to NEA, and this may help smooth approval for Spirit Airlines deal.

It was obvious as they are bound to become a major player in the country, they don’t really need AA, they just couldn’t say it before as they had a chance of losing the votes for NK, but it was obvious that this major expansion superseded any interest in codesharing at 3 airports with a subpar player.


https://seekingalpha.com/news/3883183-jetblue-said-not-as-committed-to-nea-may-help-smooth-approval-for-spirit-airlines-deal


One of the interesting things from the docket is how AA and B6 are staffing this matter. AA has twice as many lawyers working on it than B6, and essentially all of the defendants' filings are done by AA's lawyers. From my experience having been a lawyer for the co-defendant taking the lead and also having been counsel to a co-defendant sitting back, this is very telling of how important the parties view the suit. It would appear that B6 is not willing to put forward the same financial investment in the action that AA is. Of course, I could be reading too much into it. But in my experience, if something is important to your client, your client wants you and not someone else's lawyers to lead the charge.
 
User avatar
OA412
Moderator
Posts: 4998
Joined: Thu Dec 28, 2000 6:22 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 1:42 am

Please refrain from the flamebait and childishness and post respectfully.
 
FLYFIRSTCLASS
Posts: 357
Joined: Fri Jan 14, 2022 7:41 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 2:44 am

Just my own opinion here. I think AA has more to lose and hence more invested in trying to keep the NEA alive. With B6/NK tie up B6 will have the assets to do what they need to. AA has a lot more to lose if this is broken up,
 
TWA85
Posts: 376
Joined: Tue Feb 14, 2012 10:06 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 3:45 am

santi319 wrote:
As I expected, JetBlue said not as committed to NEA, and this may help smooth approval for Spirit Airlines deal.

It was obvious as they are bound to become a major player in the country, they don’t really need AA, they just couldn’t say it before as they had a chance of losing the votes for NK, but it was obvious that this major expansion superseded any interest in codesharing at 3 airports with a subpar player.


https://seekingalpha.com/news/3883183-jetblue-said-not-as-committed-to-nea-may-help-smooth-approval-for-spirit-airlines-deal


Other than the title of the article, where does it say that B6 is not as committed to the alliance? A direct from B6 in this article actually says the contrary. All B6 has said is that the NEA and NK merger are separate issues.
 
TWA85
Posts: 376
Joined: Tue Feb 14, 2012 10:06 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 3:47 am

FLYFIRSTCLASS wrote:
Just my own opinion here. I think AA has more to lose and hence more invested in trying to keep the NEA alive. With B6/NK tie up B6 will have the assets to do what they need to. AA has a lot more to lose if this is broken up,


This is a fair assessment, but it must also be pointed out that without AA, B6 will not have the slots necessary to expand in NYC. If B6 walks away from the NEA, AA will not let B6 keep the slots that AA is leasing to B6.
 
MLIAA
Posts: 529
Joined: Wed May 31, 2017 11:08 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 4:05 am

TWA85 wrote:
FLYFIRSTCLASS wrote:
Just my own opinion here. I think AA has more to lose and hence more invested in trying to keep the NEA alive. With B6/NK tie up B6 will have the assets to do what they need to. AA has a lot more to lose if this is broken up,


This is a fair assessment, but it must also be pointed out that without AA, B6 will not have the slots necessary to expand in NYC. If B6 walks away from the NEA, AA will not let B6 keep the slots that AA is leasing to B6.


With the NK merger B6 might not feel a need to expand in NY, it will have the NK slots and feel ok with that while growing out Florida and other NK strongholds like DTW ORD DFW and LAS.
 
User avatar
Midwestindy
Posts: 7448
Joined: Sun Mar 12, 2017 3:56 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 11:27 am

MLIAA wrote:
TWA85 wrote:
FLYFIRSTCLASS wrote:
Just my own opinion here. I think AA has more to lose and hence more invested in trying to keep the NEA alive. With B6/NK tie up B6 will have the assets to do what they need to. AA has a lot more to lose if this is broken up,


This is a fair assessment, but it must also be pointed out that without AA, B6 will not have the slots necessary to expand in NYC. If B6 walks away from the NEA, AA will not let B6 keep the slots that AA is leasing to B6.


With the NK merger B6 might not feel a need to expand in NY, it will have the NK slots and feel ok with that while growing out Florida and other NK strongholds like DTW ORD DFW and LAS.


They'll actually have to shrink NYC, let alone not expand.

Shrinking from your core market(s), would be an "interesting" strategy

TWA85 wrote:
santi319 wrote:
As I expected, JetBlue said not as committed to NEA, and this may help smooth approval for Spirit Airlines deal.

It was obvious as they are bound to become a major player in the country, they don’t really need AA, they just couldn’t say it before as they had a chance of losing the votes for NK, but it was obvious that this major expansion superseded any interest in codesharing at 3 airports with a subpar player.


https://seekingalpha.com/news/3883183-jetblue-said-not-as-committed-to-nea-may-help-smooth-approval-for-spirit-airlines-deal


Other than the title of the article, where does it say that B6 is not as committed to the alliance? A direct from B6 in this article actually says the contrary. All B6 has said is that the NEA and NK merger are separate issues.


They aren't going to publicly say they aren't committed
 
tphuang
Posts: 7259
Joined: Tue Mar 14, 2017 2:04 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 11:30 am

Without insider sources, I don't think we will know for a while how committed they are to NEA. I think they may be okay with certain part of NEA downgraded to get NK merger through, but not the entire deal abandoned.
 
TWA85
Posts: 376
Joined: Tue Feb 14, 2012 10:06 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 11:58 am

MLIAA wrote:
TWA85 wrote:
FLYFIRSTCLASS wrote:
Just my own opinion here. I think AA has more to lose and hence more invested in trying to keep the NEA alive. With B6/NK tie up B6 will have the assets to do what they need to. AA has a lot more to lose if this is broken up,


This is a fair assessment, but it must also be pointed out that without AA, B6 will not have the slots necessary to expand in NYC. If B6 walks away from the NEA, AA will not let B6 keep the slots that AA is leasing to B6.


With the NK merger B6 might not feel a need to expand in NY, it will have the NK slots and feel ok with that while growing out Florida and other NK strongholds like DTW ORD DFW and LAS.


That is a good point. B6 probably believes they can remain competitive on a national level after the NK merger regardless of the NEA.

That being said, the most likely outcome of the lawsuit is more commitments from AA and B6 to remain competitors outside of BOS and NYC; agreements from both airlines to regular external audits that ensure they are still competing against each other outside the scope of the NEA; and probably some more slot divestitures, especially any slots acquired from NK.

As much as some don't like the NEA, there isn't any logical basis for overturning it. The combined NEA operations in NYC are still smaller than DL and UA. Individually both airlines become weaker competitors against DL and UA. If the NEA is dissolved and one the partners significantly retreats (more likely AA), the end result would be the same (aka loosing a fourth large scale competitor). Yes the amount of coordination that the DOT has permitted between AA and B6 is unprecedented, but all existing precedents were also unprecedented at one time or another. Finally, given both DL and UA's competitive responses since the inception of the NEA, it is going to be very difficult for the DOJ to argue that the NEA has damaged competition and harmed consumers.

Again the most likely outcome is additional competitive controls and slot divestitures. Judges typically do everything they can to avoid making rulings, and thus the judge will likely do whatever is in his/her authority to broker a compromise between AA/B6 and the DOJ.
 
User avatar
LAXintl
Topic Author
Posts: 26926
Joined: Wed May 24, 2000 12:12 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 4:39 pm

Lawyers for AA asked the court to require Delta president Glen Hauenstein, and SVP network planning Joseph Esposito to appear as trial witnesses.

https://www.reuters.com/legal/litigatio ... 022-09-14/
 
cledaybuck
Posts: 2155
Joined: Thu Aug 18, 2016 6:07 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 5:26 pm

TWA85 wrote:
As much as some don't like the NEA, there isn't any logical basis for overturning it.
Of course there is. We are talking about the largest carrier in the world getting more access to NYC and the two largest carriers in BOS working together.
 
ScottB
Posts: 7954
Joined: Fri Jul 28, 2000 1:25 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 16, 2022 7:03 pm

TWA85 wrote:
This is a fair assessment, but it must also be pointed out that without AA, B6 will not have the slots necessary to expand in NYC. If B6 walks away from the NEA, AA will not let B6 keep the slots that AA is leasing to B6.


Looking at things entirely superficially, this is true; however, it's also likely that AA's position in NYC is untenable without B6. In a situation where AA starts to divest slots and gates in NYC, B6 benefits since they're not big enough at LGA to be precluded from buying or leasing assets at that airport from AA. At JFK, I suspect AA would be permitted to divest assets to new/limited entrants, which might preclude B6, although they could probably get some of AA's slots as long as a large enough number were divested to other parties.

TWA85 wrote:
As much as some don't like the NEA, there isn't any logical basis for overturning it. The combined NEA operations in NYC are still smaller than DL and UA. Individually both airlines become weaker competitors against DL and UA. If the NEA is dissolved and one the partners significantly retreats (more likely AA), the end result would be the same (aka loosing a fourth large scale competitor). Yes the amount of coordination that the DOT has permitted between AA and B6 is unprecedented, but all existing precedents were also unprecedented at one time or another. Finally, given both DL and UA's competitive responses since the inception of the NEA, it is going to be very difficult for the DOJ to argue that the NEA has damaged competition and harmed consumers.


The impact of the NEA on BOS is incredibly problematic. Further, the NEA effectively eliminates a competitor in the two largest domestic airport pairs by revenue as well as several other of the largest domestic travel markets. AA exited the BOS-LGA shuttle market this year -- ending a service which had lasted sixty years and which for decades was of the largest and most important domestic routes -- as a direct result of the NEA.
 
User avatar
UPlog
Posts: 1122
Joined: Sat Jan 27, 2018 5:45 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Mon Sep 19, 2022 5:02 pm

Out of curiosity, what it the burden of proof the DOJ needs to meet?

Does it simply needs to weave a probable enough narrative to produce doubt in the judges mind about the takeover outcome, or is there something more empirical it must prove?
 
bluecrew
Posts: 690
Joined: Sun Apr 20, 2014 3:13 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Mon Sep 19, 2022 6:23 pm

UPlog wrote:
Out of curiosity, what it the burden of proof the DOJ needs to meet?

Does it simply needs to weave a probable enough narrative to produce doubt in the judges mind about the takeover outcome, or is there something more empirical it must prove?

It's really murky. The Wikipedia article on US antitrust law actually has a lot of really good historical examples.

Historically there hasn't been too much that's actually seen a judge, recent trends have been settlements out of court, but B6 doesn't seem to want to budge. Even United States vs. AT&T was settled with a consent decree. There won't be some grand trial and decision that JetBlue shall be cast to the shadowlands - it'll be pretty civil at best, probably divestment of a few slots. Moot point now with the Spirit transaction, they'll likely be forced to end the NEA anyways, so I'd keep a lid on this one.

The antitrust guidelines are essentially that lack of action, or a proposed merger, will damage consumers because no other viable competitor exists, or it directly harms consumers. But, it's more of a way to get the company to the bargaining table.
 
User avatar
UPlog
Posts: 1122
Joined: Sat Jan 27, 2018 5:45 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 23, 2022 3:52 am

JetBlue today seems to be on a PR blitz, emailing customers, and posting on various social media touting the benefits of the NEA

Image
https://pbs.twimg.com/media/FdMZoPSWYAE ... ame=medium
 
FlyingElvii
Posts: 2453
Joined: Wed Dec 27, 2017 10:53 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 23, 2022 4:03 am

JetBlue stock hit $7.10 today.
What do they know, that we don't, other than the loss estimates.
 
11C
Posts: 510
Joined: Mon Jun 17, 2019 2:25 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 23, 2022 8:30 am

FlyingElvii wrote:
JetBlue stock hit $7.10 today.
What do they know, that we don't, other than the loss estimates.


Know sure who “they” is, but the market was broadly down yesterday, so pointing out one stock’s loss seems to indicate nothing.
 
User avatar
LAXintl
Topic Author
Posts: 26926
Joined: Wed May 24, 2000 12:12 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 23, 2022 2:51 pm

Delta fights American Airlines bid to have two of its execs testify at the antitrust trial.

https://www.reuters.com/legal/litigatio ... 022-09-22/
 
dfwfanboy
Posts: 163
Joined: Wed Dec 02, 2015 4:41 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Fri Sep 23, 2022 3:34 pm

LAXintl wrote:
Delta fights American Airlines bid to have two of its execs testify at the antitrust trial.

https://www.reuters.com/legal/litigatio ... 022-09-22/

You’ve got to figure the recent AA exec that did the B6>DL>AA move knows exactly how they’d have to testify and how delta views the NEA from a dissolution or competitive standpoint.
I believe he was the head of network planning during his short stint at delta.
 
User avatar
UPlog
Posts: 1122
Joined: Sat Jan 27, 2018 5:45 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Mon Sep 26, 2022 4:44 pm

AP, Bloomberg and WSJ all have stories today about the upcoming trial.

The gist seems to be that both sides are under pressure.
The government to have something to show after several anti-trust case failures at DOJ in recent years, while airlines must paint their commercial partnership as pro-consumer and that they still remain competitors, all the while the JetBlue-Spirit merger hangs over things and may only act disrupt the viability of NEA.

https://apnews.com/article/biden-travel ... df8336f166
https://www.bloomberg.com/news/articles ... -enforcers
 
HunterATL
Posts: 181
Joined: Sat Apr 08, 2017 3:15 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Mon Sep 26, 2022 7:32 pm

Today, Judge Sorokin quashed AA's and B6's trial subpoena served on Glen Hauenstein, Delta's president, but denied the motion to quash with respect to Joseph Esposito, Delta's senior vice-president for network planning. Mr. Esposito had already been deposed during discovery.
 
HunterATL
Posts: 181
Joined: Sat Apr 08, 2017 3:15 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Mon Sep 26, 2022 7:39 pm

The District Court will be live streaming the trial. Individuals interested must register through the court's website. The link for tomorrow morning's opening statements is https://forms.mad.uscourts.gov/seating-signup.html?id=1%3A21-cv-11558-LTSLTSSorokin09%2F27%2F20229%3A00%20AM.
 
User avatar
LAXintl
Topic Author
Posts: 26926
Joined: Wed May 24, 2000 12:12 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Tue Sep 27, 2022 10:48 pm

Reuters has story about first day of court.

https://www.reuters.com/legal/us-antitr ... 022-09-27/

JetBlue CEO Robin Hayes was on the stand today.

Trial is expected to run for three weeks.
 
User avatar
LAXintl
Topic Author
Posts: 26926
Joined: Wed May 24, 2000 12:12 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 2:51 am

A video news report
https://twitter.com/i/status/1574909031726063616

Also some tidbits coming out of todays Robin Hayes testimony:
- JetBlue under pressure after 10 quarters of losses to produce results for its shareholders
- B6 was to pay AA $200mil in revenue sharing in 2021 for NEA (JetBlue lost $182mil in 2021) but this was negotiated down to $20mil.
- Since AA growth has been less than anticipated under NEA due to sluggish business travel and international restrictions, while JetBlue has grown more, under the revenue sharing agreement, JetBlue owes AA "a hefty fee"
- Hayes has been focused on renegotiating to reduce B6 payments, along with reworking other key contracts like with Airbus.
- Hayes admitted JetBlue had to "react" to NK moves and reduce its own ticket prices
- Government contends AA/B6/NK would result in market share of 80%+ in multiple markets
- Government believes NEA net impact since launch had been $700mil in additional ticket cost
- Apparently, the government has access to executive text messages including one stating "Jetblue in their pocket" referring to AA.
 
User avatar
UPlog
Posts: 1122
Joined: Sat Jan 27, 2018 5:45 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 3:29 am

While the trial is about the NEA, the Spirit acquisition will likely greatly muddy the water and make the NEA look even worse when NK network is bolted onto B6.
 
User avatar
Midwestindy
Posts: 7448
Joined: Sun Mar 12, 2017 3:56 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 3:30 am

11C wrote:
FlyingElvii wrote:
JetBlue stock hit $7.10 today.
What do they know, that we don't, other than the loss estimates.


Know sure who “they” is, but the market was broadly down yesterday, so pointing out one stock’s loss seems to indicate nothing.


Uhhh JetBlue's stock price is literally trading at the same price/share as its lowest point of the 2020 pandemic. For context, its early 2020 Market Cap was ~$6B, its currently trading with a market cap of ~2.2B.

No major US airline has lost greater market value than B6 this year.
 
11C
Posts: 510
Joined: Mon Jun 17, 2019 2:25 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 11:14 am

Midwestindy wrote:
11C wrote:
FlyingElvii wrote:
JetBlue stock hit $7.10 today.
What do they know, that we don't, other than the loss estimates.


Know sure who “they” is, but the market was broadly down yesterday, so pointing out one stock’s loss seems to indicate nothing.


Uhhh JetBlue's stock price is literally trading at the same price/share as its lowest point of the 2020 pandemic. For context, its early 2020 Market Cap was ~$6B, its currently trading with a market cap of ~2.2B.

No major US airline has lost greater market value than B6 this year.


You are right, it’s dismal. I haven’t tracked other airlines, and assumed all were tanked. B6 obviously has some serious issues, and the NEA sounds like a potentially bad deal for them.
 
TonyClifton
Posts: 581
Joined: Thu May 14, 2020 3:19 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 1:29 pm

JB has grown more than AA and thus owes them for picking up the slack? What a terrible deal for JB while AA cuts costs and gets paid.

If I was JB I’d sink the NEA and focus on NK.
 
User avatar
Polot
Posts: 14008
Joined: Thu Jul 28, 2011 3:01 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 1:39 pm

TonyClifton wrote:
JB has grown more than AA and thus owes them for picking up the slack? What a terrible deal for JB while AA cuts costs and gets paid.

If I was JB I’d sink the NEA and focus on NK.

What it means is AA has been putting their passengers on B6’s flights more than the other way around, so the revenue doesn’t cancel out and B6 owes a portion of it to AA.

Can’t sign a joint revenue agreement to get feed from another airline then complain when that airline wants their portion of the cut based on passengers fed.
 
11C
Posts: 510
Joined: Mon Jun 17, 2019 2:25 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 2:04 pm

I think someone has already mentioned this, but maybe the Spirit deal kills two birds with one stone. Diminishes the NEA to the point that is is no longer viable, and opens another door to growth. Makes more sense than pursuing the NEA while absorbing Spirit.
 
MLIAA
Posts: 529
Joined: Wed May 31, 2017 11:08 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 3:58 pm

If this deal falls through, what moves does AA have left in NY? They have an operation that is smaller than the other NY hub carriers and is barely profitable, if at all. Would AA cut their losses and redeploy these assets elsewhere (CLT DFW AUS)?

Also a long shot, but maybe they trade their slots/gates in NY with DL and B6 in exchange for assets in BOS to create a large Boston hub.
 
ScottB
Posts: 7954
Joined: Fri Jul 28, 2000 1:25 am

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 4:23 pm

MLIAA wrote:
Also a long shot, but maybe they trade their slots/gates in NY with DL and B6 in exchange for assets in BOS to create a large Boston hub.


If the government is unhappy with a virtual merger between AA & B6 in NYC and BOS, there's no way they'd allow transactions which would lead to significantly greater concentration at BOS/JFK/LGA. I think they'd allow AA to sell/lease some slots at LGA to B6, though, as long as there's no agreement between the two to reduce competition; after all, B6 has a fairly limited slot portfolio at LGA absent the ones they've been using under the NEA. I believe they'd have to divest a significant number of slots at JFK to limited/new entrants in order to facilitate a slot transfer to B6; i.e. it's well-known UA would probably like enough slots to restore SFO/LAX-JFK and perhaps F9/G4/SY would be interested in JFK. IMO there really isn't any sort of transaction they'd OK to allow a single carrier to become dominant at BOS.
 
MIflyer12
Posts: 11783
Joined: Mon Feb 18, 2013 11:58 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 4:33 pm

MLIAA wrote:
If this deal falls through, what moves does AA have left in NY? They have an operation that is smaller than the other NY hub carriers and is barely profitable, if at all. Would AA cut their losses and redeploy these assets elsewhere (CLT DFW AUS)?

Also a long shot, but maybe they trade their slots/gates in NY with DL and B6 in exchange for assets in BOS to create a large Boston hub.


AA needs to provide a meaningful level of service in NYC to be relevant to national corporate accounts. That may mean spending big for slots and gates. It may mean operating individual flights at a loss in perpetuity. It's the biggest market in the country.
 
alasizon
Posts: 3561
Joined: Sat Apr 28, 2007 8:57 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 4:54 pm

MIflyer12 wrote:
MLIAA wrote:
If this deal falls through, what moves does AA have left in NY? They have an operation that is smaller than the other NY hub carriers and is barely profitable, if at all. Would AA cut their losses and redeploy these assets elsewhere (CLT DFW AUS)?

Also a long shot, but maybe they trade their slots/gates in NY with DL and B6 in exchange for assets in BOS to create a large Boston hub.


AA needs to provide a meaningful level of service in NYC to be relevant to national corporate accounts. That may mean spending big for slots and gates. It may mean operating individual flights at a loss in perpetuity. It's the biggest market in the country.


AA operated a lot of NYC at a loss for years and only after cutting back to near the current levels did it turn profitable. They've been very open (and Vasu has publicly commented on it) about the fact that NYC was a loss-making operation since the early to mid-2000s and only turned profitable in 2017/2018.

If NYC is profitable as it stands today (not sure where it stands in terms of pandemic recovery), AA might piece meal add here and there but overall there is no need to keep adding just for the sake of "oh my gosh it's NYC, we have to fly everywhere". The markets they fly currently cover most of the business demand and their corporate contracts. More and more companies have shrunk their presence in the NYC area and so corporate travel contracts no longer are based just on NYC, it's typically some combination of NYC and whatever other east coast or sun belt city they've chosen to move those ex-NYC staff too.
 
UpNAWAy
Posts: 885
Joined: Thu Aug 11, 2016 12:42 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 4:58 pm

MIflyer12 wrote:
MLIAA wrote:
If this deal falls through, what moves does AA have left in NY? They have an operation that is smaller than the other NY hub carriers and is barely profitable, if at all. Would AA cut their losses and redeploy these assets elsewhere (CLT DFW AUS)?

Also a long shot, but maybe they trade their slots/gates in NY with DL and B6 in exchange for assets in BOS to create a large Boston hub.


AA needs to provide a meaningful level of service in NYC to be relevant to national corporate accounts. That may mean spending big for slots and gates. It may mean operating individual flights at a loss in perpetuity. It's the biggest market in the country.


That's how AA used to operate and it never worked. They canned all of those flight 3-4 years ago that had never made money in their history. NYC never made money as a whole do to those loses. I don't see them ever going back to just accepting perpetual losses just for market share. And with business travel reduced possibly permanently, chasing market share just because the big clients expect it doesn't make much sense. Now there could be a very limited number of markets that you could do as loss leaders but only if the majority are profitable can that work.
 
Brickell305
Posts: 1820
Joined: Sat Jun 24, 2017 2:07 pm

Re: AA-JetBlue Northeast Alliance(NEA) Court Case Discussion

Wed Sep 28, 2022 5:48 pm

UpNAWAy wrote:
MIflyer12 wrote:
MLIAA wrote:
If this deal falls through, what moves does AA have left in NY? They have an operation that is smaller than the other NY hub carriers and is barely profitable, if at all. Would AA cut their losses and redeploy these assets elsewhere (CLT DFW AUS)?

Also a long shot, but maybe they trade their slots/gates in NY with DL and B6 in exchange for assets in BOS to create a large Boston hub.


AA needs to provide a meaningful level of service in NYC to be relevant to national corporate accounts. That may mean spending big for slots and gates. It may mean operating individual flights at a loss in perpetuity. It's the biggest market in the country.


That's how AA used to operate and it never worked. They canned all of those flight 3-4 years ago that had never made money in their history. NYC never made money as a whole do to those loses. I don't see them ever going back to just accepting perpetual losses just for market share. And with business travel reduced possibly permanently, chasing market share just because the big clients expect it doesn't make much sense. Now there could be a very limited number of markets that you could do as loss leaders but only if the majority are profitable can that work.

One of the differences between back then and now is that AA makes a lot more money from credit card agreements now than it did then. NYC is the largest market in the country for credit card services and a larger presence there may stimulate demand for AAdvantage cards. That could help offset the losses that may arise from flying.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos