Federal Judge Blocks JetBlue's Purchase of Spirit Airlines
A federal judge has blocked JetBlue Airways' proposed purchase of ULCC Spirit Airlines following a lawsuit filed by the Justice Department.
A federal judge has blocked JetBlue Airways' proposed purchase of ULCC Spirit Airlines following a lawsuit filed by the Justice Department.
DALLAS — A federal judge has blocked JetBlue Airways' (B6) proposed purchase of ULCC Spirit Airlines (NK) following a lawsuit filed by the Justice Department.
According to CNBC, the lawsuit alleges that the merger would eliminate NK as a disruptive and innovative competitor, reducing consumer choice in the markets it serves and therefore leading to increased fares for price-sensitive consumers.
In his decision, U.S. District Court Judge William Young stated that B6 planned to convert NK's planes to the former's layout and charge higher average fares to its customers. We can recall that back in December, the Justice Department (DOJ) argued that the merger would result in fewer flight options and higher prices, particularly for cost-conscious customers who prefer NK's low ticket prices.
The decision is seen as a victory for the DOJ, which has been actively seeking to block deals it views as anti-competitive, reflecting the Biden administration's more aggressive enforcement of antitrust laws. The administration says it aims to preserve competition among low-cost airlines to ensure affordable air travel for consumers.
The court transcript docket shared by Edward Russell via X read the following: "...the Court rules that the proposed acquisition violates Section 7 of the Clayton Act. 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."
The Clayton Antitrust Act of 1914 is a key component of US antitrust law that aims to prevent anticompetitive practices from emerging and strengthen the existing antitrust law regime. Section 7 of the Clayton Antitrust Act prohibits mergers, acquisitions, and certain joint ventures where the effect may be to substantially lessen competition.
The ruling concludes, "In light of the foregoing Findings of Fact and Conclusions of Law, it is hereby ORDERED that the Defendant Airlines, their agents, servants, employees, and all persons acting in concert with either of them, are PERMANENTLY ENJOINED from executing the proposed merger as agreed on July 28, 2022."
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JetBlue's US$3.8 billion acquisition of NK would have created the fifth-largest airline in the country, allowing the carriers to better compete against larger rivals like Delta Air Lines (DL) and United Airlines (UA).
Following the announcement, NK shares plunged by 60%, while B6 shares experienced fluctuations between gains and losses. The airlines said they are evaluating the next legal steps.
Featured image: JetBlue and Spirit Airlines tails at FLL. Photo: Helwing Villamizar/Airways
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