Jetblue said Friday it may back out of its merger with Spirit Airlines, after a federal judge blocked the $3.8 billion deal last week.
16.01.2024 - 20:29 / thepointsguy.com / William G.Young
JetBlue's merger with Spirit Airlines was blocked by a federal judge on Tuesday, putting an end to a combination that would have seen JetBlue absorb Spirit and scrap the ultra-low-cost carrier's brand.
In the ruling, Judge William G. Young of U.S. District Court in Massachusetts found that the merger was anti-competitive, agreeing with a U.S. Department of Justice argument that said the merger violated antitrust laws.
The decision was a major blow to JetBlue, which also saw its Northeast Alliance with American Airlines scrapped in antitrust court in 2023.
JetBlue had argued that it needed Spirit's aircraft and crew members in order to supercharge its growth to a size that would allow it to compete with bigger U.S. carriers.
It was not immediately clear whether JetBlue plans to appeal the decision.
In a joint statement, the two airlines said that they disagreed with the ruling.
"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," the airlines said. "We are reviewing the court's decision and are evaluating our next steps as part of the legal process."
Share prices for Spirit fell more than 50%, while JetBlue was up more than 5%.
Judge Young's ruling comes more than five weeks after a month-long trial closed on Dec. 5 in Boston.
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Throughout the initial bid and the trial, JetBlue argued that by absorbing Spirit, it could double its size and compete more effectively with the four major U.S. airlines — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines — that together control about 80% of the U.S. air travel market.
The DOJ, however, argued that the merger would hurt the most price-sensitive consumers, with Spirit's elimination from the market on some routes causing prices to rise. The department sued in March to stop the merger.
While the DOJ has challenged previous mergers between airlines, many were settled. A series of bankruptcies and industry consolidations that led to the current dynamic with four major U.S. airlines — many of which were ultimately allowed by the DOJ — has created a playing field where smaller entrants must merge to survive and prosper, according to JetBlue's lawyers.
During the trial, JetBlue and Spirit also argued that if Spirit were to stop existing, other ultra-low-cost carriers — such as Frontier, Allegiant, Avelo and Breeze, among others — would fill the void. During the trial, executives from both airlines testified that Spirit, which has struggled to return to profitability following the onset of the COVID-19 pandemic, cannot continue
Jetblue said Friday it may back out of its merger with Spirit Airlines, after a federal judge blocked the $3.8 billion deal last week.
JetBlue on Friday said for the first time that its agreement to purchase Spirit Airlines for $3.8 billion may collapse, signaling that the New York-based airline may be looking to pull out of the deal.
Spirit Airlines is expanding its presence in South Carolina, adding flights from Charleston to Boston and New York City this spring.
JetBlue Airways said on Friday that it might back out of a $3.8 billion acquisition of Spirit Airlines after a federal judge blocked the deal.
On January 16, a federal court judge ruled to block JetBlue Airways’ proposed $3.8 billion purchase of Spirit Airlines on antitrust grounds. The decision was made based on a U.S. Justice Department lawsuit filed in March 2023 and aimed at stopping the deal. According to the suit, the merger would “allow JetBlue to eliminate its largest ultra-low-cost rival, further concentrate the airline industry, and harm American travelers.”
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JetBlue and Spirit said Friday they are planning to appeal a judge’s ruling that blocked their proposed merger.
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JetBlue and Spirit said Friday that they will appeal a judge's decision that would block them from completing their blockbuster merger.