Feds move to block JetBlue buy of Spirit Airlines
The U.S. government sued JetBlue Airlines on Tuesday over its attempt to acquire Spirit Airlines, saying it risked putting air travel out of reach for budget-conscious passengers who can’t afford other airlines’ prices.
The $3.8 billion deal, announced last July, would remove Spirit’s price-dampening influence on fellow airlines in the markets they compete in, the DOJ said. The suit also says the merger would eliminate half of the extreme-budget fares in the U.S., leading to higher fares and fewer seats on routes nationwide.
“If the acquisition is approved, JetBlue plans to abandon Spirit’s business model, remove seats from Spirit’s planes, and charge Spirit’s customers higher prices,” U.S. Attorney General Merrick Garland said in remarks after filing the suit in U.S. District Court in Boston.
“Our complaint alleges that JetBlue’s acquisition of Spirit would particularly hurt cost-conscious travelers,” said Associate Attorney General Vanita Gupta in a DOJ statement. “Ultra-low-cost carriers make air travel possible so more Americans can take a much-needed family vacation or celebrate or mourn together with loved ones.”
The two airlines have been bracing for such
a move, providing the DOJ with extra documents when requested, but attempts to come to a settlement fell short.
“We said when we got the offer approved by the Spirit shareholders last year that we didn’t think we would close until the first half of 2024, expecting a trial,” JetBlue CEO Robin Hayes said Tuesday on “CBS Mornings,” declaring himself “disappointed but not surprised.”
In a joint statement, JetBlue and Spirit noted that the four biggest airlines — American, Delta, United and Southwest — control 80% of the
market “after years of industry consolidation that the DOJ itself approved.”
“We disagree with the DOJ’s decision to seek to block the proposed merger, which will benefit consumers and employees,” said Spirit CEO Ted Christie in the statement. “We will vigorously defend our position that a combined JetBlue and Spirit will be a game changer for customers nationwide, creating the most compelling national low-fare challenger to the dominant U.S. carriers.”