A federal judge blocked a merger between JetBlue Airways and Spirit Airlines, Tuesday, Jan. 16. JetBlue planned to acquire Spirit Airlines for $3.8 billion. However, U.S. Judge William Young in Boston agreed with the U.S. Justice Department that the deal was anticompetitive and would harm customers.
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JetBlue’s lawyers argued against the decision calling it a “misguided” challenge to a merger of the nation’s sixth-and-seventh-largest airlines, which combined would control more than 10 percent of the domestic market dominated by four larger airlines.
The ruling marked a victory for the White House and its efforts to prevent further consolidation of the U.S. airline industry. The decision also puts another recently proposed deal in jeopardy, Alaska Air’s acquisition of Hawaiian Airlines.
President Joe Biden called the ruling “a victory for consumers everywhere who want lower prices and more choices.”
The U.S. federal judge who made the ruling found the deal violated U.S. antitrust law and also puts into question Spirit Airline’s future. The ultra-low-cost carrier has struggled to turn a profit in the midst of soaring operating costs and supply chain issues.
Spirit’s shares closed down 47% on Tuesday after the ruling, while JetBlue shares ended up 5% higher.
The airlines can appeal the ruling. In a joint statement, JetBlue and Spirit said they were evaluating “next steps as part of the legal process.”
This isn’t the first time has dealt been dealt a blow on a merger. In May, another Boston judge, Leo Sorokin, sided with the U.S. Justice Department in finding that JetBlue’s U.S. Northeast partnership with American Airlines violated antitrust law.
In response, JetBlue terminated the alliance. American Airlines is still appealing Sorokin’s decision.
[KARAH RUCKER]
A FEDERAL JUDGE HAS BLOCKED THE PROPOSED MERGER BETWEEN JETBLUE AND SPIRIT AIRLINES.
SPIRIT LOSING 50 PERCENT OF ITS STOCK PRICE AS NEWS BROKE.
THE JUDGE ON TUESDAY SIDING WITH THE JUSTICE DEPARTMENT – WHICH HAD SUED TO STOP THE THREE POINT EIGHT BILLION DOLLAR DEAL – SAYING IT WOULD HARM COMPETITION AND VIOLATE ANTI-TRUST LAWS.
THE JUDGE WRITING IN HIS DECISION THAT JETBLUE’S PLANS TO ELIMINATE SPIRIT AIRLINES WOULD “HARM COST-CONSCIOUS TRAVELERS WHO RELY ON SPIRIT’S LOW FARES.”
THE MERGER WOULD HAVE CREATED THE FIFTH-LARGEST AIRLINE IN THE COUNTRY – A DEAL JETBLUE SAID IS NEEDED TO COMPETE WITH BIGGER RIVALS.
BOTH AIRLINES ARE CONSIDERING AN APPEAL.
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