NEW YORK — The prospect of a JetBlue-Spirit Airlines merger took a major blow in court on Tuesday when a federal judge sided with the Biden administration and blocked the $3.8 billion deal.
The judge ruled that JetBlue’s purchase of Spirit, the nation’s largest low-cost airline, would harm competition and, as a result, raise prices for air travelers. JetBlue, meanwhile, has maintained that it needs such a deal to compete with its industry rivals.
Here’s a summary of what you need to know.
It all comes down to concerns about competition. The Justice Department and several state attorneys general sued to block the merger last year, arguing it would raise rates by eliminating the low-cost Spirit. U.S. District Judge William Young agreed.
Young, who was nominated for federal office by President Ronald Reagan, ruled that the merger would harm competition and violate antitrust law.
“There are no ‘bad guys’ in this case,” the Boston-based judge wrote. “The two corporations seek, as they are expected to do, to maximize shareholder value. “The Department of Justice is, as required by law, speaking on behalf of consumers who would otherwise have no voice.”
With no merger in sight, the status quo for both JetBlue and Spirit remains the same, meaning air travelers shouldn’t expect any major changes anytime soon.
But JetBlue and Spirit said they disagreed with the ruling and are considering appealing. JetBlue, the nation’s sixth-largest airline by revenue, argued it needs the deal to better compete with larger rivals.
The ruling could also open the door for Frontier Airlines to make another attempt to buy Florida-based Spirit. The two low-cost airlines announced a cash-and-stock deal in 2022, but JetBlue made an all-cash offer and won the bidding war.
Tuesday’s ruling was a victory for the Biden administration, which has taken aggressive steps to block mergers in several industries, including health care, video games and publishing, arguing that such consolidation harms consumers.
Attorney General Merrick Garland said Tuesday that the Justice Department “will continue to vigorously enforce the nation’s antitrust laws to protect American consumers.”
The administration’s court victory could make it more likely that it will challenge Alaska Airlines’ proposal to buy Hawaiian Airlines.
In the past, the Justice Department has faced criticism for green-lighting a wave of mergers. In the air travel space, previous administrations allowed a series of deals that consolidated the industry to the point where four airlines (American, Delta, United and Southwest) control about 80% of the domestic market.
Spirit shares plunged 47% on Tuesday. JetBlue shares gained 5%.