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UPDATE 1-American Airlines CEO defends JetBlue alliance in antitrust trial

(Recasts with end of Isom's testimony)

By Diane Bartz and David Shepardson

WASHINGTON, Oct 3 (Reuters) - The head of American Airlines Group denied Monday that his company's alliance with JetBlue Airways Corp meant that the two airlines had created a de facto merger in the northeastern United States.

Chief Executive Robert Isom, testifying in an antitrust trial in Boston, pushed back against assertions that the companies acted as a single airline in Boston and the New York area following creation of their Northeast Alliance in 2020. The Justice Department has asked a judge to order it undone.

Justice Department attorney Bill Jones said that in the four airports covered by the alliance, customers would view JetBlue and American as a single company.

"No, that's not true," Isom said quickly. "We have our own gate. We have our own planes. We have our own services that make us distinct."

Isom also testified that he had been concerned about competition from Delta and United, particularly in Boston and the New York area.

And he took issue with suggestions that American, the world's largest airline, could have expanded without JetBlue.

The Justice Department's Jones suggested American did not have to worry about JetBlue going after premium customers in Boston, which Isom disputed saying he said both airlines "are going to go after all premium customers."

The U.S. Justice Department, six states and the District of Columbia have called the alliance a "de facto merger" of the companies' Boston and New York operations, in which they coordinate flights and pool revenue to the detriment of travelers, which it argues face $700 million in extra annual costs.

Isom was pressed on a March 2020 email he sent recounting a conversation with former Delta Chief Executive Richard Anderson about the massive falloff in travel demand from the COVID-19 pandemic.

Isom's email said there was agreement the "industry is going to have to shed a tremendous amount of capacity -- turning the dial back 5 years as a guide to what 2021 looks like."

Congress awarded $54 billion to U.S. airlines in payroll assistance through September 2021 that prevented many significant cuts the industry had forecast. U.S. District Judge Leo Sorokin, in Boston, will decide the case. (Reporting by Diane Bartz and David Shepardson; Editing by Bernadette Baum)