The JetBlue-Spirit Airlines merger was blocked by a federal judge. Here’s what you need to know
FLE – A line of Spirit Airlines jets sit on the tarmac at the Orlando International Airport on May 20, 2020, in Orlando, Fla. A federal judge is siding with the Biden administration and blocking JetBlue Airways from buying Spirit Airlines, saying the $3.8 billion deal would reduce competition. The Justice Department sued to block the merger, saying it would drive up fares by eliminating Spirit, the nation’s biggest low-cost airline. (AP Photo/Chris O’Meara, File)
NEW YORK (AP) — The prospect of a JetBlue-Spirit Airlines merger took a major hit in court on Tuesday when a federal judge sided with the Biden administration and blocked the $3.8 billion deal.
The judge ruled that JetBlue’s purchase of Spirit, the nation’s largest low-cost airline, would harm competition — and increase prices for air travelers as a result. Meanwhile, JetBlue has maintained that it needs such a deal to compete with industry rivals.
Here’s a rundown of what you need to know.
WHY WAS THE JETBLUE-SPIRIT MERGER BLOCKED?
It boils down to competition concerns. The Justice Department and several state attorneys general sued to block the merger last year — arguing that it would drive up fares by eliminating low-cost Spirit. U.S. District Judge William Young agreed.
Young, who was nominated for the federal bench by President Ronald Reagan, ruled that the merger would harm competition and violate antitrust law.
“There are no ‘bad guys’ in this case,” the Boston-based judge wrote. “The two corporations are — as they are expected to — seeking to maximize shareholder value. The Department of Justice is — as the law requires — speaking for consumers who otherwise would have no voice.”
WHAT’S NEXT?
With no merger in sight, the status quo for both JetBlue and Spirit remains — meaning air travelers shouldn’t expect major changes anytime soon.
But JetBlue and Spirit said they disagreed with the ruling and are considering whether to appeal. JetBlue, the nation’s sixth-largest airline by revenue, argued that it needs the deal to better compete with larger rivals.
The ruling could also open the door for Frontier Airlines to make another attempt to buy Florida-based Spirit. The two budget airlines announced a cash-and-stock deal back in 2022, but JetBlue made an all-cash offer and won the bidding war.
WHAT’S THE REGULATORY OUTLOOK FOR MERGERS LIKE THESE?
Tuesday’s ruling was a victory for the Biden administration, which has moved aggressively to block mergers across several industries — including health care, video gaming and publishing — arguing that such consolidation hurts consumers.
Attorney General Merrick Garland said Tuesday that the Justice Department will “continue to vigorously enforce the nation’s antitrust laws to protect American consumers.”
The administration’s court victory could make it more likely that it will challenge Alaska Airlines’ proposal to buy Hawaiian Airlines.
In the past, the Justice Department has faced criticism for greenlighting a wave of mergers. Within air travel, previous administrations allowed a series of deals that consolidated the industry to the point where four carriers — American, Delta, United and Southwest — control about 80% of the domestic market.
HOW DID THE STOCKS OF JETBLUE AND SPIRIT REACT?
Spirit shares plunged 47% Tuesday. JetBlue’s stock gained 5%.
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