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JetBlue Airways announced in July 2022 that it wanted to acquire Spirit Airlines for $3.8 billion. Frontier Airlines was planning to merge with Spirit, but JetBlue outbid them and started on its path to combining the two low-cost carriers. The Department of Justice (DOJ) challenged the merger in court. The trial started two months ago and reached closing arguments today. Now what?
The DOJ has argued from the beginning that a merger between JetBlue and Spirit would decrease competition and increase fares. JetBlue’s attorneys made a mistake at one point and released documents that were not properly redacted. They showed that the carrier would indeed raise fares by as much as 40% (more here). This didn’t impact the case, but was a careless mistake. There are 51 markets served by both JetBlue and Spirit and the DOJ argues that fares will especially increase here.
JetBlue has countered from the beginning that the merger would create a fifth airline that could better compete with American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines. To proactively try to appease the DOJ, JetBlue has given up slots to Frontier (more here) and Allegiant (more here). This had not been enough to appease the DOJ and the lawsuit to block the merger moved forward.
Judge Young, an appointee of Ronald Reagan, is overseeing the case. He made a few statements today that could be read into, but has not been definitive one way or the other. He asked the DOJ if it would be satisfied JetBlue agreed to more divestitures. The DOJ did not seem happy with that solution and still feels that “there does not seem to be a remedy other than a full-stop injunction that would restore competition.”
Anthony’s Take: I think JetBlue will acquire Spirit Airlines after it agrees to give up a few more gates/slots at airports where its presence will grow significantly. JetBlue has a lot to lose in the huge fee it will have to pay Spirit if this falls through and with the increased focus from consumers on premium experiences, you have to wonder if either could survive longterm using the current low-cost carrier model.
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