In news that rocked the corporate world, a federal court has put a stop to a proposed merger between Spirit Airlines and JetBlue, siding with the government in a pivotal antitrust case, as the Washington Examiner reported.
The ruling scuttled a deal that would have seen JetBlue acquiring bargain carrier Spirit Airlines for $3.8 billion in a deal that had the potential to reshape the cut-price transportation landscape.
Deal declared dead
Handing a clear victory to the Justice Department, Judge William Young of the U.S. District Court for the District of Massachusetts appeared to agree with the contention that the proposed linkage would harm airline industry competition in an unacceptable way.
In handing down a permanent block on the merger, Young explained, “The Court has made its best attempt, applying the law to the evidence in this case, to predict the future of a dynamic market recovering from the COVID-19 pandemic, in markedly uncertain times.”
Ultimately, Young determined that the deal at issue constituted a violation of Section 7 of the Clayton Antitrust Act of 1914.
“JetBlue plans to convert Spirit's planes to the JetBlue layout and charge JetBlue's higher average fares to its customers,” Young wrote. “The elimination of Spirit would harm cost-conscious travelers who rely on Spirit's low fares.”
Young's ruling was swiftly lauded by the Justice Department, which has continued to battle against mergers it believes are anti-competitive in nature.
Reacting to the decision, Attorney General Merrick Garland declared, “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,” Garland added.
Airlines to appeal
In the wake of the decision, JetBlue issued a statement saying, “We disagree with the U.S. District Court's ruling. We continue to believe that our combination is the best opportunity to increase much needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant U.S. carriers.”
On Friday, Spirit Airlines and JetBlue Airways filed a notice of appeal to the First U.S. Circuit Court of Appeals, as The Hill noted, suggesting that the issue of their desired merger may not yet be closed.
Representatives for JetBlue indicated that the appeal of Young's decision would be pursued “consistent with the requirements of the merger agreement,” but where that effort ultimately goes, only time will tell.