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American Airlines : U.S. senator concerned American, JetBlue partnership will raise prices

09/17/2021 | 04:29pm EDT
FILE PHOTO: JetBlue Airways aircraft are pictured at departure gates at John F. Kennedy International Airport in New York

WASHINGTON (Reuters) - U.S. Senator Richard Blumenthal, a Democrat who has been outspoken on antitrust issues, expressed concern to the Transportation Department on Friday that a partnership between American Airlines and JetBlue Airways would lead to higher airfares.

The airlines' "Northeast Alliance" partnership was announced in July 2020 and approved by the Transportation Department six months later, shortly before the end of the Trump administration.

The codeshare agreement allows American and JetBlue to sell each other's flights in their New York-area and Boston networks and link frequent flyer programs, in a move aimed at giving them more muscle to compete with United Airlines and Delta Air Lines in the U.S. Northeast.

"I write with grave concerns that the recent joint partnership between American Airlines and JetBlue Airways will lead to anticompetitive coordination at key air traffic hubs and result in the long-term inflation of airfares and related costs for airline passengers," Blumenthal said in a letter to U.S. Transportation Secretary Pete Buttigieg.

Blumenthal urged a "full public interest review and investigation of the Northeast Alliance cooperative agreement," noting that President Joe Biden had signed an executive order on competition in July. Blumenthal cited the White House as saying that the top four airlines had nearly two-thirds of the U.S. domestic market.

"I am concerned that the Northeast Alliance is exactly the kind of arrangement that has led us to this point and that will lead to even further consolidation in an already overly concentrated industry. Under the circumstances, this arrangement deserves more scrutiny," he wrote.

In a statement, JetBlue said the partnership allowed the two airlines to give Delta and United real competition.

JetBlue said its access to American's slots would mean that it could "bring the JetBlue effect of lowering fares and stimulating demand to more routes in and out of the Northeast."

The Transportation Department on Thursday said it planned to award 16 take-off and landing slots at Newark Liberty International Airport to a yet-to-be-determined low-cost carrier, and said it could take action to boost competition at other major airports.

(Reporting by Diane Bartz and David Shepardson; Editing by Paul Simao)

© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. -0.70% 19.84 Delayed Quote.25.81%
JETBLUE AIRWAYS CORPORATION -2.09% 14.96 Delayed Quote.2.89%
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Financials (USD)
Sales 2021 29 729 M - -
Net income 2021 -2 233 M - -
Net Debt 2021 33 453 M - -
P/E ratio 2021 -4,79x
Yield 2021 -
Capitalization 12 846 M 12 846 M -
EV / Sales 2021 1,56x
EV / Sales 2022 1,08x
Nbr of Employees 117 400
Free-Float 98,1%
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American Airlines Group Inc. Technical Analysis Chart | AAL | US02376R1023 | MarketScreener
Technical analysis trends AMERICAN AIRLINES GROUP INC.
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Last Close Price 19,84 $
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Managers and Directors
William Douglas Parker Chairman & Chief Executive Officer
Robert D. Isom President
Derek J. Kerr Chief Financial & Accounting Officer, Executive VP
Maya Leibman Chief Information Officer & Executive VP
Kevin Brickner Senior Vice President-Technical Operations