A US federal judge has ruled against the proposed merger between JetBlue and Spirit Airlines, marking a win for the Department of Justice (DOJ). The DOJ had opposed the merger, arguing it would lead to increased airfares. Announced in July 2022, this merger was scrutinized after Frontier Airlines expressed interest in acquiring Spirit. The trial, which concluded in early December following its commencement last fall, has resulted in the judge’s decision after just over a month.

JetBlue’s ambition for the merger was to maintain low ticket prices and enhance its competitiveness against major airlines like Southwest Airlines. With this setback, JetBlue’s newly appointed CEO Joanna Geraghty faces the task of steering the airline towards a different course.

In light of the foregoing Finds of Fact and Conclusions of Law, it is herby ordered that the Defendent Airlines, their agents, servants, employees, and all persons acting in concert with either of them, are PERMANENTLY ENJOINED, from executing proposed merger as agreed as on July 18, 2022.

Judge William G. Young

Yesterday, at 13:00 Eastern Time, Spirit Airlines’ stock plummeted by 60%, while JetBlue’s saw a comparatively minor 5% decline. Court filings reveal that the Department of Justice (DOJ) sought a permanent injunction against any future mergers between Spirit and JetBlue, but the judge did not grant this request. In his verdict, the judge expressed that such a prohibition would disrupt the free market, implying that the airlines might reapply or appeal. Judge Young encouraged both parties to resolve their issues outside of the courtroom.

JetBlue, in its defense, contested the DOJ’s claim of the merger being anti-competitive. Their defense hinged on two main arguments: Firstly, Spirit Airlines’ significant financial challenges were highlighted, suggesting that the merger would rescue passengers from an unstable airline. Secondly, JetBlue argued that uniting with Spirit would enable them to offer stiffer competition to the ‘Big Four’ airlines (American Airlines, Delta Air Lines, United Airlines, and Southwest Airlines), who currently dominate over 80% of the U.S. market. JetBlue maintained that individually, neither they nor Spirit could effectively challenge this dominance.

We disagree with the U.S. District Court’s ruling. We continue to believe that our combination is the best opportunity to increase much needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant U.S. carriers. 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. We are reviewing the court’s decision and are evaluating our next steps as part of the legal process.

Joint statement from JetBlue and Spirit Airlines

Featured Image: Marcus Mainka/Shutterstock

Source: Simple Flying