A federal judge on Tuesday blocked JetBlue Airways’ acquisition of Spirit Airlines, responding to the Justice Department’s antitrust lawsuit. The judge argued that the merger would lead to increased fares for price-sensitive consumers by removing the discount carrier, Spirit, from the market.
The proposed $3.8 billion purchase aimed to create the nation’s fifth-largest airline, with JetBlue and Spirit intending to enhance growth and competitiveness against larger rivals like Delta and United.
In his decision, U.S. District Court Judge William Young expressed concerns that JetBlue planned to convert Spirit’s planes to its own layout and charge higher average fares, harming cost-conscious travelers who rely on Spirit’s low fares. The ruling is seen as a victory for the Justice Department, which has actively opposed deals deemed anti-competitive.
Attorney General Merrick Garland stated that the decision protects consumers from higher fares and limited choices. The Justice Department’s lawsuit, filed in March, argued that JetBlue’s acquisition would eliminate Spirit and a significant portion of ultra-low-cost airline seats, leading to higher fares for many passengers.
Spirit Airlines, known for its no-frills model offering cheap fares and additional fees, faced a substantial stock decline of 47% after the ruling, while JetBlue’s stock gained approximately 5%.
JetBlue and Spirit expressed disagreement with the ruling, emphasizing their belief that the merger would enhance competition and choice by offering low fares and excellent service. The decision leaves JetBlue considering its next steps, with the incoming CEO, Joanna Geraghty, tasked with navigating the airline’s future direction.
This legal development follows a previous ruling in Massachusetts where a different U.S. District Court judge supported the Justice Department in blocking JetBlue’s regional alliance with American Airlines in the Northeast. JetBlue and Spirit, in a joint statement, asserted that their termination of the Northeast Alliance and commitment to significant divestitures addressed any anti-competitive concerns raised by the Justice Department.
