The Denver Post

Jetblue expects merger block

- By Niraj Chokshi

Jetblue Airways said Monday that it saw a “high likelihood” that the Justice Department would sue the company this week over its planned acquisitio­n of Spirit Airlines. The $3.8 billion deal could create a new challenger to the nation’s four dominant carriers, but would add to industry consolidat­ion.

Jetblue said that it had long prepared for such a lawsuit and that its timeline for closing the deal was unchanged, provided it overcomes the expected challenge in court.

“We believe there is a high likelihood of a complaint from DOJ this week, and we have always accounted for that in our timeline to close the transactio­n in the first half of 2024,” the company said. The Justice Department and Spirit did not immediatel­y respond to requests for comment.

Buying Spirit would allow JetBlue to accelerate its plans for growth. Today, Jetblue controls more than 5% of the U.S. airline market. After the acquisitio­n, it would have a 10% share, making it the fifth-largest airline in the country. United Airlines, the fourth-largest carrier, has a 15% market share. Southwest Airlines, Delta Air Lines and American Airlines each have a more than 17% share.

“Jetblue’s combinatio­n with Spirit allows it to create a compelling national challenger to these dominant airlines,” Jetblue said in a news release Monday describing some of its arguments in favor of the deal.

The acquisitio­n would benefit consumers and disrupt the industry, it said, allowing Jetblue to bring low fares to new markets and forcing those large airlines to match its lower prices. JetBlue also said it had committed to giving up some of Spirit’s holdings in markets such as Boston, New York and Fort Lauderdale, Fla., where the combined airline would have an outsize presence. In addition to the Justice Department, the Transporta­tion Department could also stand in the way of the deal by blocking the transfer of operating certificat­es, opponents of the sale have argued.

After the expectatio­n of a federal move to block the acquisitio­n was reported Monday, Spirit shares fell more than 8%. Jetblue shares were up 1%.

Critics of the deal say that Spirit itself has been a disruptive force and that removing it from the market would limit competitio­n and further consolidat­e an already concentrat­ed industry. While Jetblue is known for affordable fares, Spirit offers even lower prices, charging extra for everything from printing boarding passes at airport kiosks to selecting seats in advance. After the deal, Jetblue would reconfigur­e Spirit’s densely packed planes, removing seats, increasing legroom and adjusting the economics of each flight.

Unions representi­ng workers at both airlines are divided on whether the merger should proceed. Last month, the Associatio­n of Flight Attendants­CWA, which represents 5,600 flight attendants at Spirit, wrote to Attorney General Merrick Garland and Transporta­tion Secretary Pete Buttigieg to express support for the deal.

“The Jetblue - Spi r it

merger will help to correct conditions in the industry with demonstrab­le improvemen­ts and protection­s for workers along with greater competitio­n that benefits workers and consumers alike,” the union’s president, Sara Nelson, said in the letter. “This is the anti- merger, merger.”

In a separate letter, the head of the Transport Workers Union, which represents 6,800 Jetblue flight attendants, asked Garland and Buttigieg to prevent the acquisitio­n, arguing

that it would violate antitrust laws and undermine competitio­n and workers.

In a letter in September, Sen. Elizabeth Warren, DMass., asked Buttigieg to use his department’s “historical­ly underutili­zed” authoritie­s to intervene.

Jetblue is also awaiting the outcome of a Justice Department antitrust lawsuit over the airline’s partnershi­p with American in Boston and New York. A federal judge in Boston is expected to issue a decision in that case imminently.

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