JetBlue's ambitious $3.8 billion plan to take over Spirit Airlines hit a major roadblock, with a federal judge in Boston siding with the Biden administration to halt the deal in its tracks. According to Boston 25 News, U.S. District Judge William Young ruled that the merger would "substantially lessen competition" and violated antitrust law which has been around for a century.
Judge Young delivered a significant win for travelers dependent on Spirit's low-cost fares. "Spirit is a small airline. But there are those who love it. To those dedicated customers of Spirit, this one’s for you. Why? Because the Clayton Act, a 109-year-old statute requires this result – a statute that continues to deliver for the American people," wrote Judge Young, as reported by WCVB. Following this declaration, Spirit's shares took a nosedive, plunging more than half, while JetBlue shares saw an increase of 8 percent.
The antitrust lawsuit from the Biden administration posited that the merger would increase fares by cutting down on the competition that Spirit uniquely provides. A Justice Department lawyer argued in court that prices could soar by up to 30% if the merger came to fruition. "If JetBlue were permitted to gobble up Spirit -– at least as proposed -- it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline," Young penned in a 113-page decision.
JetBlue disagreed with Young's ruling and is contemplating an appeal. “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,” stated JetBlue in a release snagged by Boston 25 News. This setback throws a wrench into the growth strategies for the airline, now with the task falling on the shoulders of incoming CEO Joanna Geraghty to chart a new course.
JetBlue has faced another setback in court, marking its second legal disappointment in less than a year. A previous partnership endeavor with American Airlines was rejected by a different judge in the same Boston courthouse. In the wake of Judge Young's recent ruling, attention may shift back to Frontier Airlines, which might revive its efforts to acquire Spirit. This comes after an unsuccessful bid against JetBlue in 2022.
