Market News

Antitrust Trial on American Airlines and JetBlue Begins

Story Highlights

The DOJ had filed a lawsuit last year, contesting the partnership between American Airlines and JetBlue, arguing that the collaboration will reduce competition and potentially increase airfares.

An antitrust trial on the controversial partnership between American Airlines (NASDAQ:AAL) and JetBlue Airways (NASDAQ:JBLU) kicked off on Tuesday. The partnership between the two airlines appears to have a lot at stake. Department of Justice (DOJ) lawyers believe that the partnership will lead to reduced competition and increased airfares.

The partnership, which was announced in 2020, joined American Airlines and JetBlue in an alliance in Boston and New York. Incidentally, both cities are currently dominated by United Airlines (NASDAQ:UAL) and Delta Airlines (NYSE:DAL). Now, problems arose when leading airlines like American Airlines and JetBlue, instead of competing in those cities, chose to join forces and share revenues and access to airport gates. This aside, each airline would sell tickets for both flights along certain routes and take part in other programs to encourage traffic to each other’s flights.

Working on Biden’s push to enforce antitrust laws and promote competition, the DOJ believes that an alliance between American Airlines, the world’s largest airline by market share, and JetBlue, is bound to be treated as a partial merger and hurt competition in two key cities.

The DOJ and six states, along with the District of Columbia, filed an antitrust suit against the partnership last year.

Are AAL and JBLU Good Stocks to Buy?

Eight analysts on Wall Street unanimously have a Hold rating on the American Airlines stock. The average price target for the stands at $16.57, indicating a 35% upside.

The JetBlue stock, on the other hand, is also a Hold on Wall Street, based on one Buy and six Holds. The average price target of $9.21 on the JBLU stock indicates a 36% upside potential for stock appreciation.


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