JetBlue-Spirit Merger Blocked After DOJ Antitrust Complaint

(CTN News) – The Justice Department filed a lawsuit against JetBlue Airways’ acquisition of Spirit Airlines, claiming the move would increase fares for consumers who are price sensitive. As a result of a federal judge’s decision, the Justice Department has won an important victory.

Purchasing discount airline Spirit for $3.8 billion would have created the country’s fifth-largest airline, a deal JetBlue and United said could boost their growth and competitiveness.

A federal judge in Boston blocked an anticompetitive deal earlier this month.

In light of JetBlue’s plan, the Justice Department alleges that millions of travelers will face higher fares and fewer options as well as losing out on Spirit’s unique competition.

In response to the announcement, Spirit shares plunged 60%, while JetBlue shares fluctuated between gains and losses.

It is not clear whether either airline has commented on the decision. JetBlue has said access to Spirit’s similar Airbus fleet will allow it to grow quickly when pilots and planes are scarce, a growth it says it needs to compete with bigger airlines. Approximately three-quarters of the domestic market is controlled by United, Delta, American and Southwest following years of consolidation.

The decision leaves JetBlue scrambling to figure out next steps, leaving incoming CEO Joanna Geraghty to navigate the airline’s future. Robin Hayes recently announced that he would retire, and Geraghty has been named as his successor. Spirit Airlines had planned to use Spirit to gain access to more routes and passengers during congested airspace in New York and other cities.

Spirit’s yellow planes will be remodeled by JetBlue to provide more of a full-service model by removing the branding. As a result of its inexpensive fares and fees for everything else from seat assignments to carry-on luggage, Spirit has grown rapidly in recent years.

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