(StraightShooterNews.com) – Concerned about adverse effects on price-sensitive consumers due to the removal of a budget airline from the market, a federal judge ruled against JetBlue Airways’ proposed acquisition of Spirit Airlines.
The decision came after the Justice Department filed a lawsuit to halt the merger, valued at $3.8 billion, which would have created the fifth-largest airline in the United States.
Both JetBlue and Spirit argued that the merger would enable them to expand and compete more effectively with larger airlines such as Delta and United. However, U.S. District Court Judge William Young highlighted the potential negative impact on consumers in his ruling.
“JetBlue plans to convert Spirit’s planes to the JetBlue layout and charge JetBlue’s higher average fares to its customers,” he wrote. “The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares.”
The ruling represents a significant win for the Justice Department, which has taken an aggressive stance against transactions it deems anti-competitive.
Attorney General Merrick Garland expressed satisfaction with the outcome, stating, “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. The Justice Department will continue to vigorously enforce the nation’s antitrust laws to protect American consumers.”
The Department of Justice filed the lawsuit in March, arguing that the acquisition would lead to higher fares for many passengers by eliminating Spirit, thus removing about half of all ultra-low-cost airline seats in the industry.
Spirit Airlines, known for its economical fares and additional charges for services like seat assignments and carry-on luggage, has experienced rapid growth in recent years. Judge Young, appointed by former President Ronald Reagan, acknowledged Spirit’s significance, saying, “Spirit is a small airline. But there are those who love it. To those dedicated customers of Spirit, this one’s for you.”
Following the ruling, Spirit’s shares saw a sharp decline, closing the day down 47%, while JetBlue’s stock saw an approximate 5% increase. Spirit’s most recent market capitalization stood at $1.66 billion, significantly lower than JetBlue’s proposed purchase price.
The Florida-based airline has faced challenges, including grounded airplanes due to engine manufacturing issues and weaker-than-expected travel demand, complicating its financial outlook.
