JetBlue Airways and Spirit Airlines merger skips

It was supposed to become America's fifth largest airline, but the merger will not happen. Stopping the $3.8 billion deal between JetBlue Airways and Spirit Airlines was the Federal Court in Boston, which invalidated the acquisition after agreeing with the US Department of Justice on the anti-competitive aspects of the deal that would have harmed consumers: the merger between the sixth and seventh US airline would have controlled 10.2% of a domestic market dominated by the four major airlines (United Airlines, American Airlines, Delta Air Lines and Southwest Airlines) that control 80% of the US market.

The ruling marks a victory for the White House committed to preventing mergers in the airline industry to the detriment of consumers and raises doubts about the feasibility of another merger in the sector, that between Hawaiian Airlines and Alaska Airlines. President Joe Biden himself, who has made the promotion of airline competition a top priority, called the ruling 'a victory for consumers seeking the lowest prices and the widest choice'. In a joint statement, the two companies said they were considering appealing the ruling.

The ruling established that the merger violated US antitrust law, but now at issue is Spirit's future. The ultra low cost carrier risks bankruptcy for failing to recover ground after the pandemic, weighed down by rising operating costs and persistent supply chain problems. The consequences are uncertain, as shown by the performance of Spirit's shares, which plummeted 47% after the ruling and are now down more than 18%: the acquisition represented a breath of fresh air for the carrier, which now risks bankruptcy. JetBlue's shares bucked the trend, gaining about 5 per cent.

The Justice Department said that allowing JetBlue to absorb its direct ultra low-cost competitor Spirit would cause nearly $1 billion in losses to consumers. Spirit was the first US domestic carrier to charge for in-flight services such as baggage and in-flight dining. JetBlue is a more expensive low-cost airline than Spirit that is able to exert pressure on the larger airlines in forcing them to reduce their ticket prices. The New York-based airline had tried to address the concerns of US regulators by agreeing to surrender gates and slots at key airports in New York City, Boston, Newark, New Jersey, and Fort Lauderdale, Florida, but it did not help to change the federal judge's opinion.