Federal Judge Blocks JetBlue-Spirit Merger
A federal judge has blocked JetBlue Airways’ purchase of Spirit Airlines after the Justice Department (DOJ) sued to stop the merger.
The merger, the DOJ argued, would drive up fares by taking the airlines out of the discount carrier market.
JetBlue’s proposed purchase of Spirt would have cost $3.8 billion and created the country’s fifth-largest airline. According to the airlines, the merger would have helped the companies compete against larger rivals like Delta and United.
“JetBlue plans to convert Spirit’s planes to the JetBlue layout and charge JetBlue’s higher average fares to its customers,” U.S. District Court Judge William Young wrote. “The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares.”
The DOJ Argued the Merger Would Be Anti-Competitive
In their lawsuit filed last March, the DOJ argued that JetBlue’s acquisition of Spirit would force “tens of millions” of passengers to pay higher fares due to the elimination of Spirit and “about half of all ultra-low-cost airline seats in the industry.”
While Spirit is often derided for its add-on fees, the airline has grown rapidly thanks to its cheap fares.
“Spirit is a small airline. But there are those who love it,” Young wrote in his ruling. “To those dedicated customers of Spirit, this one’s for you.”
JetBlue and Spirit Are Evaluating Their Next Steps
Following the ruling, Spirit shares fell 50%, while JetBlue’s stock rose 5%.
In a joint statement, JetBlue and Spirit released a statement saying they were evaluating their next steps.
“We continue to believe that our combination is the best opportunity to increase much needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant U.S. carriers,” the carriers said.
A Win For the DOJ
Today’s ruling is seen as a big win for the Justice Department, which has aggressively sued to block deals it believed were anti-competitive.
Last year, a judge in Massachusetts sided with the DOJ and blocked JetBlue’s regional alliance with American Airlines in the Northeast. The deal would have allowed the carriers to coordinate their flight schedules and routes.
In their statement today, JetBlue and Spirit wrote that the end of the regional deal should have allived any anti-competitive concerns.
“JetBlue’s termination of the Northeast Alliance and commitment to significant divestitures have removed any reasonable anti-competitive concerns that the Department of Justice raised.”
In the end, Judge Young ruled the merger of Spirt and JetBlue would create a lack of competition.
“Although Spirit’s yellow aircraft livery would not immediately be repainted as JetBlue planes, at the moment the merger is consummated, Spirit and JetBlue would no longer be competitors,” Young wrote in his decision.
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