JetBlue’s acquisition of Spirit Airlines faces a significant hurdle from the US Department of Justice, which is reportedly very close to opposing the deal. The carrier’s quest to become the 5th largest US airline by market share could involve lawsuits as it moves towards its 2024 timeline of finalizing the merger.
Hurdles
The United States Department of Justice (DOJ) is expected to file an antitrust lawsuit to block JetBlue from merging with Spirit Airlines. The DOJ was expected to issue its decision on the proposed $3.8 billion merger by early March, and various reports suggest that it is very close to announcing its intention to oppose the deal.
Photo: Vincenzo Pace | Simple Flying
Bloomberg reports that the Justice Department could file the lawsuit by Tuesday itself, while The Wall Street Journal (WSJ), too, reports that JetBlue’s chief executive Robin Hayes expects some action from the DOJ this week itself. In an interview on Monday, Hayes was quoted as saying,
“My expectation is that we will get sued by the DOJ this week. My sense is they came to the table with their minds made up.”
DOJ’s stance on the proposed merger is not all that surprising, as the WSJ highlights how it has always viewed the merger of airlines as hurting competition. It has also taken a tough stand on corporate mergers in general under the Biden administration.
Transportation Department could stop the deal, too
Another blow to the merger is expected to come from the United States Department of Transportation. According to Bloomberg, the Transportation Department could also take similar action against the deal as it potentially views the merger as reducing competition within the aviation industry further.
Photo: Vincenzo Pace | Simple Flying
In its defense, JetBlue has already argued that the merger would, in fact, be suitable for competition within the industry as opposed to hurting it and that it would advance US international-aviation policy goals.
JetBlue will not take it lying down
JetBlue’s path towards acquiring Spirit has not been an easy one. It was earlier engaged in an intense bidding war with Frontier Airlines, creating multiple headlines as it played out in public. Now, with potential opposition from authorities, the airline is staring at a legal fight in the coming days.
JetBlue, however, is prepared to fight, and has, in fact, come up with the 2024 timeline keeping the possibility of a lawsuit in mind. Last month, Hayes had indicated that the airline is prepared to go to court, if necessary, to ensure the deal is approved.
Photo: Carlos Yudica/Shutterstock
Should the deal close successfully, JetBlue will be the fifth largest US carrier, commanding an almost 10% share of the US market. The airline argues that the deal would only challenge the monopoly of the four largest airlines (American, United, Delta, and Southwest), which together account for 80% of the US aviation market.
JetBlue has also already agreed to let go of Spirit Airlines’ assets in both Boston and New York and has agreed to concede several Spirit Airlines’ slots at Fort Lauderdale-Hollywood International Airport (FLL), where they both have a significant presence.
The carrier is already facing a lawsuit filed by the DOJ against its Northeast Alliance with American Airlines, which, the airline has argued, has only created better competition in the region against other rival airlines in the region.
Clearly, JetBlue has a lot on its plate for the next few months as it tries to overcome one hurdle after another ahead of its merger with Spirit Airlines.
What do you make of these developments? Please leave a comment below.
Source: Bloomberg, The Wall Street Journal
Photo: Vincenzo Pace/Simple Flying JetBlue
- IATA/ICAO Code:
- B6/JBA
- Hub(s):
- Boston Logan International Airport, Los Angeles International Airport, New York JFK Airport, Orlando International Airport
- Year Founded:
- 2000
- CEO:
- Robin Hayes
- Country:
- United States
