Update (1353ET):
JetBlue Airways and Spirit Airlines have released a statement saying they disagree with US District Judge William G. Young's decision to block the merger.
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Spirit Airlines shares crashed as much as 60%, and JetBlue Airways shares tumbled 12% around lunchtime after a federal judge in Boston blocked the merger, alleging it would increase ticket prices for low-income consumers.
This is a big win for Biden's Justice Department, which has sued to block JetBlue's proposed $3.8 billion acquisition of Spirit.
"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 DoJ alleged in its lawsuit in March.
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.
Update (1353ET):
JetBlue Airways and Spirit Airlines have released a statement saying they disagree with US District Judge William G. Young’s decision to block the merger.
* * *
Spirit Airlines shares crashed as much as 60%, and JetBlue Airways shares tumbled 12% around lunchtime after a federal judge in Boston blocked the merger, alleging it would increase ticket prices for low-income consumers.
This is a big win for Biden’s Justice Department, which has sued to block JetBlue’s proposed $3.8 billion acquisition of Spirit.
“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 DoJ alleged in its lawsuit in March.
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.
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