LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.
Leslie Josephs | CNBC
A federal judge blocked JetBlue Airways‘ purchase of budget rival Spirit Airlines, a major win for Biden’s Justice Department, which sued to stop the merger, alleging it would drive up fares for some of the most price-sensitive consumers.
JetBlue’s proposed $3.8 billion purchase of discounter Spirit would have produced the country’s fifth-largest airline, a deal the carriers said would help them better grow and compete against larger rivals like Delta and United.
The decision, handed down Tuesday by a federal judge in Boston, marks a victory for a Justice Department that has aggressively sought to block deals it views as anticompetitive.
“JetBlue’s plan would eliminate the unique competition that Spirit provides—and about half of all ultra-low-cost airline seats in the industry—and leave tens of millions of travelers to face higher fares and fewer options,” the Justice Department alleged in its lawsuit in March.
Spirit shares plunged after the decision was announced and were down 60%, while JetBlue shares swung between gains and losses.
Neither airline immediately commented on the decision.
Spirit Airlines and JetBlue Airways stock after a federal judge blocked the carrier’s proposed merger.
JetBlue has said access to Spirit’s similar fleet of Airbus planes would allow it to grow quickly when planes and pilots are in short supply, growth it argues it needs to compete against bigger airlines. Years of previous consolidation left United, Delta, American and Southwest in control of about three-quarters of domestic market.
The decision leaves New York-based JetBlue grappling with next steps, tasking incoming CEO Joanna Geraghty with steering the airline on a new path. Geraghty was announced as successor to CEO Robin Hayes after he said earlier this month that he would retire.
The airline operates in highly congested airspace in New York and other cities, and had planned to use Spirit as a way to gain access to more routes and travelers.
JetBlue planned to remodel Spirit’s yellow planes by removing the branding and seats from the tightly-packed planes to provide more of a full-service model.
Spirit had grown rapidly in recent years by offering cheap fares and fees for everything else from seat assignments to carry-on luggage.
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This story originally appeared on CNBC
