JetBlue/Spirit merger blocked.
A federal judge Tuesday blocked JetBlue Airways’ purchase of Spirit Airlines after the Justice Department sued to stop the merger, saying the deal would drive up fares for price-sensitive consumers by taking the discount carrier out of the market.
JetBlue’s proposed $3.8 billion purchase of discounter Spirit would have produced the country’s fifth-largest airline, a deal the carriers had said would help them better grow and 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 in his decision. “The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares.”
The decision, handed down Tuesday, marks a victory for a Justice Department that has aggressively sought to block deals it views as anti-competitive.
“Today’s ruling is a victory for tens of millions of travelers who would have faced higher fares and fewer choices had the proposed merger between JetBlue and Spirit been allowed to move forward,” Attorney General Merrick Garland said in a statement. “The Justice Department will continue to vigorously enforce the nation’s antitrust laws to protect American consumers.”
The DOJ alleged in its lawsuit, filed in March, that JetBlue’s acquisition of the budget airline would force many passengers to pay higher fares by eliminating Spirit and “about half of all ultra-low-cost airline seats in the industry.”
Spirit has grown rapidly in recent years by offering cheap fares and fees for everything else from seat assignments to carry-on luggage, a no-frills model that has become a favorite punchline for late-night comedians.
“Spirit is a small airline. But there are those who love it,” Young, who was appointed by former President Ronald Reagan, wrote in his ruling. “To those dedicated customers of Spirit, this one’s for you.”
Spirit shares plunged after the ruling and ended the day down 47%, while JetBlue’s stock gained about 5%.
Spirit’s market capitalization as of Friday’s close was $1.66 billion, less than half of JetBlue’s proposed purchase price. The Miramar, Florida-based airline has been struggling with grounded airplanes due to an engine manufacturing issue and softer-than-expected travel demand.
| JetBlue-Spirit Deal Foiled |
| A federal judge yesterday blocked JetBlue Airways from acquiring Spirit Airlines, ruling the $3.8B deal would have driven up fares for price-conscious travelers and hurt competition. Spirit's shares closed down 47% yesterday; JetBlue shares closed up 4.9%. |
JetBlue’s proposed $3.8 billion purchase of discounter Spirit would have produced the country’s fifth-largest airline, a deal the carriers had said would help them better grow and 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 in his decision. “The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares.”
The decision, handed down Tuesday, marks a victory for a Justice Department that has aggressively sought to block deals it views as anti-competitive.
“Today’s ruling is a victory for tens of millions of travelers who would have faced higher fares and fewer choices had the proposed merger between JetBlue and Spirit been allowed to move forward,” Attorney General Merrick Garland said in a statement. “The Justice Department will continue to vigorously enforce the nation’s antitrust laws to protect American consumers.”
The DOJ alleged in its lawsuit, filed in March, that JetBlue’s acquisition of the budget airline would force many passengers to pay higher fares by eliminating Spirit and “about half of all ultra-low-cost airline seats in the industry.”
Spirit has grown rapidly in recent years by offering cheap fares and fees for everything else from seat assignments to carry-on luggage, a no-frills model that has become a favorite punchline for late-night comedians.
“Spirit is a small airline. But there are those who love it,” Young, who was appointed by former President Ronald Reagan, wrote in his ruling. “To those dedicated customers of Spirit, this one’s for you.”
Spirit shares plunged after the ruling and ended the day down 47%, while JetBlue’s stock gained about 5%.
Spirit’s market capitalization as of Friday’s close was $1.66 billion, less than half of JetBlue’s proposed purchase price. The Miramar, Florida-based airline has been struggling with grounded airplanes due to an engine manufacturing issue and softer-than-expected travel demand.
