LaGuardia
International
Airport
Terminal
A
for
JetBlue
and
Spirit
Airlines
in
New
York.
Leslie
Josephs
|
CNBC
A
federal
judge
Tuesday
blocked
JetBlue
Airways‘
purchase
of
Spirit
Airlines
after
the
Justice
Department
sued
to
stop
the
merger,
saying
the
deal
would
drive
up
fares
for
price-sensitive
consumers
by
taking
the
discount
carrier
out
of
the
market.
JetBlue’s
proposed
$3.8
billion
purchase
of
discounter
Spirit
would
have
produced
the
country’s
fifth-largest
airline,
a
deal
the
carriers
had
said
would
help
them
better
grow
and
compete
against
larger
rivals
like
Delta
and
United.
“JetBlue
plans
to
convert
Spirit’s
planes
to
the
JetBlue
layout
and
charge
JetBlue’s
higher
average
fares
to
its
customers,”
U.S.
District
Court
Judge
William
Young
wrote
in
his
decision.
“The
elimination
of
Spirit
would
harm
cost-conscious
travelers
who
rely
on
Spirit’s
low
fares.”
The
decision,
handed
down
Tuesday,
marks
a
victory
for
a
Justice
Department
that
has
aggressively
sought
to
block
deals
it
views
as
anti-competitive.
“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,”
Attorney
General
Merrick
Garland
said
in
a
statement.
“The
Justice
Department
will
continue
to
vigorously
enforce
the
nation’s
antitrust
laws
to
protect
American
consumers.”
The
DOJ
alleged
in
its
lawsuit,
filed
in
March,
that
JetBlue’s
acquisition
of
the
budget
airline
would
force
many
passengers
to
pay
higher
fares
by
eliminating
Spirit
and
“about
half
of
all
ultra-low-cost
airline
seats
in
the
industry.”
Spirit
has
grown
rapidly
in
recent
years
by
offering
cheap
fares
and
fees
for
everything
else
from
seat
assignments
to
carry-on
luggage,
a
no-frills
model
that
has
become
a
favorite
punchline
for
late-night
comedians.
“Spirit
is
a
small
airline.
But
there
are
those
who
love
it,”
Young,
who
was
appointed
by
former
President
Ronald
Reagan,
wrote
in
his
ruling.
“To
those
dedicated
customers
of
Spirit,
this
one’s
for
you.”
Spirit
shares
plunged
after
the
ruling
and
ended
the
day
down
47%,
while
JetBlue’s
stock
gained
about
5%.
Spirit’s
market
capitalization
as
of
Friday’s
close
was
$1.66
billion,
less
than
half
of
JetBlue’s
proposed
purchase
price.
The
Miramar,
Florida-based
airline
has
been
struggling
with
grounded
airplanes
due
to
an
engine
manufacturing
issue
and
softer-than-expected
travel
demand.
Spirit
Airlines
and
JetBlue
Airways
stock
after
a
federal
judge
blocked
the
carrier’s
proposed
merger.
JetBlue
and
Spirit
said
in
a
joint
statement
that
they
disagreed
with
the
ruling
and
were
evaluating
next
steps.
“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,”
the
carriers
said.
A
different
U.S.
District
Court
judge
in
Massachusetts
sided
with
the
Justice
Department
last
year
to
block
JetBlue’s
regional
alliance
with
American
Airlines
in
the
Northeast,
a
partnership
that
allowed
the
carriers
to
coordinate
routes
and
schedules.
JetBlue
and
Spirit
said
Tuesday
that
“JetBlue’s
termination
of
the
Northeast
Alliance
and
commitment
to
significant
divestitures
have
removed
any
reasonable
anti-competitive
concerns
that
the
Department
of
Justice
raised.”
Hard-won
deal
JetBlue
fought
hard
for
Spirit.
It
launched
a
hostile
takeover
bid
weeks
after
Frontier
Airlines
and
Spirit
agreed
to
merge
in
a
cash-and-stock
deal.
Frontier’s
business
model
is
more
similar
to
Spirit’s,
and
both
airlines
have
similar
fleet
configurations,
unlike
JetBlue’s
more
full-service
model
which
stands
in
contrast
to
Spirit’s
discount
strategy.
After
Spirit’s
board
rejected
JetBlue’s
initial
takeover
offer,
Spirit
CEO
Ted
Christie
said
in
May
2022
that
he
didn’t
think
a
JetBlue
deal
would
be
approved
by
regulators,
citing
the
American
Airlines
partnership
and
JetBlue’s
plan
to
take
seats
out
of
the
market.
“It
will
not
happen
in
our
opinion
and
for
that
reason
our
board
has
rejected
it
and
to
imply
otherwise
again,
we
think
is
insulting,”
he
said
on
CNBC’s
“Squawk
Box”
at
the
time.
Spirit
shareholders
ended
up
rejecting
the
Frontier
deal
and
months
later
approving
a
sweetened
JetBlue
proposal
in
October
2022.
New
CEO
Young’s
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.
JetBlue
argued
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
said
it
needs
to
compete
against
bigger
airlines.
The
carrier
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.
Years
of
previous
consolidation
left
United,
Delta,
American
and
Southwest
in
control
of
about
three-quarters
of
the
domestic
market.
JetBlue
planned
to
remodel
Spirit’s
yellow
planes
by
removing
the
branding
and
seats
from
the
tightly
packed
jets
to
provide
more
of
a
full-service
model.
“Although
Spirit’s
yellow
aircraft
livery
would
not
immediately
be
repainted
as
JetBlue
planes,
at
the
moment
the
merger
is
consummated,
Spirit
and
JetBlue
would
no
longer
be
competitors,”
Young
wrote
in
his
decision.
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