By Mike Scarcella

WASHINGTON, Feb 20 (Reuters) - JetBlue JBLU.O has failed to convince a Texas state judge to dismiss a lawsuit brought by American Airlines AAL.O that seeks more than $100 million in damages over the companies' defunct commercial alliance for passenger air travel in the Northeast.

In his ruling on Thursday, Judge Jerry Bullard of the Texas Business Court in Fort Worth rejected JetBlue’s arguments that its contract dispute with American is outside the authority of Texas courts and should be dismissed.

Bullard’s ruling is a setback for JetBlue but came at an early stage of the case and did not address the merits of American’s allegations.

American and JetBlue did not immediately respond to requests for comment.

Texas-based American sued JetBlue last year over the collapse of the carriers’ 2020 Northeast Alliance, which allowed the companies to coordinate flights and share revenue. American, the nation’s largest airline, and JetBlue, the sixth‑largest, teamed up on flights in and out of New York and Boston.

American alleges JetBlue did not make contractual payments due after an audit and reconciliation process after the partnership fell apart in the wake of rulings in a separate antitrust case over the alliance.

“Rather than face American’s claim on its merits, JetBlue has done nothing but try to avoid litigating this case in Texas,” American said in a court filing in its lawsuit.

In seeking to dismiss American's lawsuit, JetBlue argued that the dispute centered on operations and revenues at four Northeast airports and that the contracts are governed by New York law.

Bullard said the case was properly filed in Texas because JetBlue “purposefully sought benefits" from the state, operated thousands of Texas flights under the alliance, employed personnel in the state and leased airport property.

The case is American Airlines v JetBlue Airways, Texas Business Court, Eighth Division, No. 25-BC08A-0007.

For American: David Tolley and Michael Bern of Latham & Watkins; and Dee Kelly of Kelly Hart & Hallman

For JetBlue: Michael Hanin and Joshua Naftalis of Pallas Partners; and Paul Schuster and Warren Harris of Bracewell

Read more:

American Airlines ends JetBlue talks, sues over collapsed alliance

American Airlines loses US appeal of ruling barring JetBlue alliance

(Reporting by Mike Scarcella)

((Email: mike.scarcella@thomsonreuters.com; Phone: 202-985-8228.))