Joe Cavaretta/South Florida Sun Sentinel/Tribune News Service/Getty Images
Spirit Airlines jetliners on the tarmac at Fort Lauderdale Hollywood International Airport on December 26, 2023.
Spirit Airlines shares fell 47% on Tuesday after a federal judge in Boston ruled against JetBlue's proposed $3.8 billion takeover of the discount airline.
The ruling outlined a number of concerns, including increased fees for flyers, a discount to Spirit's customers in particular, and significant debt to JetBlue. (blue).
JetBlue and Spirit told CNN they disagreed with the ruling.
“We continue to believe that our combination is a great opportunity to increase much-needed competition and choice by bringing lower fares and better service to more customers in more markets, while improving our ability to compete with more U.S. carriers,” JetBlue and Spirit said. A joint email statement to CNN. “We are reviewing the court's decision and evaluating our next steps as part of the legal process.”
JetBlue shares were up 4.9% in late trading on Tuesday.
The U.S. Justice Department filed a lawsuit in March to block the deal, the first time For more than 20 years The government tried to block the merger of American airlines.
Since taking office, the Biden administration has advocated for more competition between businesses, specifically Aviation industry, to reduce consumer spending. the spirit (save)with that Low base fee business model It charges customers extra for everything, including carry-on bags, prompting major carriers to offer a percentage of their seats at a much lower price.
“Today's ruling is a victory for the tens of thousands of travelers who would have faced higher fares and fewer choices if the proposed merger between JetBlue and Spirit had been allowed to move forward,” Attorney General Merrick Garland said in a statement. On Tuesday. “The Department of Justice will continue to aggressively enforce the nation's antitrust laws to protect American consumers.”
JetBlue has argued that the deal would create a new, stronger competitor to those big four airlines, without lowering fares.
Before this deal was announced, the US aviation industry had gone through more than 20 years of mergers and consolidations. 10 Major Airlines in 1999 Merged into four major carriers — American Airlines, United, Delta Air Lines and Southwest Airlines — through a series of deals, often done as part of bankruptcy proceedings. Those four largest carriers account for 80% of the country's air traffic.
These mergers have resulted in a more profitable US airline industry, but fewer choices for US air travelers, potentially resulting in higher fares.
The Biden administration has taken a more aggressive approach in fighting mergers and acquisitions, including in the airline industry. Prior to the deal, Northeast filed a federal lawsuit challenging the alliance between American and JetBlue. That alliance was abandoned as JetBlue tried to get approval to buy Spirit.
The now-blocked JetBlue deal for Spirit came after JetBlue outbid a proposed merger between Spirit and another discount airline, Frontier Airlines. Spirit management initially supported the Frontier deal, raising the possibility that regulators would block the deal with JetBlue. But after Spirit shareholders rejected the less profitable Frontier deal, Spirit management reversed course and accepted a deal with JetBlue.
Another merger is now being sought in the US aviation industry, which has been proposed $1.9 billion deal To connect Alaska Airlines and Hawaiian Airlines.
Shares of Hawaiian Holdings were down 2% on Tuesday afternoon.
Spirit is the lowest-cost airline market leader, with very low fares that passengers pay for any extras, including carry-on bags. While that approach has prompted the nation's major carriers to offer a limited number of seats in “basic economy” class on their planes with a uniform fare structure, it has consistently made Spirit an airline with low customer satisfaction ratings and a butt of jokes. on midnight television.