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Federal Judge Blocks The Merger Of Two American-Based Airlines
A federal judge has blocked JetBlue Airways’ purchase of Spirit Airlines after the Department of Justice sued to stop the merger.
According to CNBC‚ the DOJ argued the “deal was anti-competitive and would hurt consumers.”
JetBlue Airways and Spirit Airlines released a joint statement saying they disagree with U.S. District Judge William G. Young’s decision to block the purchase.
“JetBlue proposed a purchase of Spirit Airlines for $3.8 billion‚ which the two carriers argued would help with competition against other airlines such as United or Delta‚” Just the News noted.
BREAKING: JetBlue's $3.8 billion buyout of Spirit Airlines is blocked by judge citing competition threat https://t.co/WOedoACgjM
— The Associated Press (@AP) January 16‚ 2024
CNBC reports:
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 airlines 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 anticompetitive.
The DOJ alleged in its lawsuit‚ filed in March‚ that JetBlue’s acquisition of the budget airline would force “tens of millions” of 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.
“The court sided with my office and blocked JetBlue’s takeover of Spirit‚ protecting competition &; keeping costs lower for airline travelers. Traveling is already stressful &; expensive—I’ll keep fighting to keep costs down &; improve quality of service for air travelers‚” North Carolina Attorney General Josh Stein said.
BREAKING: The court sided with my office and blocked JetBlue's takeover of Spirit‚ protecting competition &; keeping costs lower for airline travelers. Traveling is already stressful &; expensive—I’ll keep fighting to keep costs down &; improve quality of service for air travelers.
— Josh Stein (@JoshStein_) January 16‚ 2024
Per Zero Hedge:
It appears they got their wish as US District Judge William G. Young ruled favor of the federal government. He argued the merger would hurt cost-conscious travelers by eliminating deep-fare discount airlines:
“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 wrote‚ adding “Worse yet‚ the merger would likely incentivize JetBlue further to abandon its roots as a maverick‚ low-cost carrier.”
The ruling comes after a trial in November‚ where lawyers for the feds claimed that the merger would eliminate the need for larger airlines to offer budget-friendly fares. Both airlines argued that consolidation was the only way to achieve cheaper tickets.
However‚ the feds have claimed removing Spirit as a rival would allow JetBlue to raise prices by as much as 30%.
According to Bloomberg‚ “The merger agreement between the companies expires in July 2024 and JetBlue and Spirit could appeal Young’s decision to the First US Circuit Court of Appeals in Boston. The final outcome could reshape the competitive landscape for low-cost carriers in the US.”
“Spirit is a small airline. But there are those who love it. To those dedicated customers of Spirit‚ this one’s for you‚” the judge said.