JetBlue Airways’ proposed USD$3.8 billion (AUD$5.8 billion) acquisition of fellow LCC Spirit Airlines was vetoed by a federal judge ruling amid concerns the JetBlue-Spirit merger would adversely affect competition and access to low-price fares.
District Judge William Young said while a JetBlue-Spirit merger would likely place “stronger competitive pressure” on larger carriers that dominate the domestic airline market, “consumers that rely on Spirit’s unique, low-price model would likely be harmed”, Reuters reported on the 16 January decision.
His ruling backed up US Department of Justice (DOJ) anti-trust concerns that a combined JetBlue-Spirit merger would result in “higher fares and fewer choices” when it comes to domestic flights, affecting millions of Americans.
The ruling could also impact other US airline deals and acquisitions in the pipeline, such as Alaska Airline’s planned buyout of Hawaiian Airlines.
In a joint statement, JetBlue and Spirit disagreed with the judge’s ruling and were considering their next steps, including an appeal.
JetBlue’s lawyers argued that the DOJ case was a “misguided” challenge to a merger between the nation’s sixth- and seventh-largest carriers, which combined would control 10.2 per cent of a domestic market dominated by four larger airlines.
The JetBlue + Spirit merger proposed a national low-fare challenger brand to the ‘Big Four’ US carriers of American Airlines, Delta Air Lines, United Airlines and Southwest Airlines, which hold 80 per cent of US seats between them.
The deal would see JetBlue and Spirit combine to create the nation’s fifth-largest domestic carrier and a low-fare alternative.
The setback also comes as JetBlue announced its new CEO while Spirit stock halved due to the ruling along with a more than three per cent drop for shares in Hawaiian and Alaska.
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