9 C
New York

JetBlue won the battle for Spirit. Now it has to win over Biden’s Justice Department


JetBlue Airways finally won over Spirit Airlines with a $3.8 billion takeover deal. Now it must win over antitrust regulators.

The Latest York-based airline snatched Spirit away Frontier Airlines with an all-cash offer that torpedoed the cash-and-stock deal the 2 discount airlines had forged earlier this 12 months. Hours after Spirit and Frontier said they terminated their merger agreement, which lacked shareholder support, Spirit said it agreed to sell itself to JetBlue.

JetBlue said it expects to win regulatory approval within the fourth quarter of next 12 months or the primary three months of 2024. The carriers expect the deal to shut in the primary half of 2024.

If regulators log off, it might mean the top Spirit, a brand that has grow to be a punchline concerning the indignities of discount air travel, where passengers trade comforts like standard legroom, snacks and free cabin baggage for an inexpensive fare.

JetBlue Airlines and Spirit Airlines are seen on the departure board within the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

Will regulators allow an ultra-low-cost airline to get absorbed in the course of the hottest stretch of inflation in a long time and remodeled into JetBlue’s image, which more closely resembles large carriers?

The regulatory hurdle is high. President Joe Biden’s Justice Department has vowed to challenge out any deals that would harm competition. Last 12 months, it sued to dam JetBlue’ alliance with American Airlines within the Northeast. A trial is ready to start in late September.

JetBlue is optimistic. The DOJ lawsuit alleges American could overpower JetBlue and says the alliance, which lets American and JetBlue coordinate routes in busy airports serving Latest York and Boston, amounts to “a de facto merger.”

JetBlue CEO Robin Hayes said a combined Spirit and JetBlue, which might grow to be the country’s fifth-largest airline, would create a robust competitor to the large 4 U.S. carriers: American, Delta, United and Southwest. After greater than a decade of consolidation, those carriers control roughly three-quarters of the U.S. market.

“The most effective thing we are able to do to make the industry more competitive is to make a very national, low-fare high-quality airline to compete on a more national scale with these legacy airlines,” Hayes said in an interview. “By merging JetBlue and Spirit together, we’re capable of try this rather more quickly than we might do alone.”

American declined to comment. The Justice Department didn’t immediately reply to a request for comment however the agency’s antitrust chief, Jonathan Kanter, has promised a tough stance against anti-competition.

“It isn’t any secret that many settlements fail to preserve competition,” Kanter said in a speech in Chicago in April. “Even divestitures may not fully preserve competition across all its dimensions in dynamic market.”

The Justice Department has signed off on airline mergers, though not without some legal battles. The mix of American Airlines and US Airways in 2013, for instance, was approved at the top of that 12 months after the department sued to stop the deal.

However it is prone to require JetBlue and Spirit to divest a few of their assets in the method, said John Lopatka, a law professor who makes a speciality of antitrust law at Penn State Law.

Without that, “there can be a public perception that [the Justice Department] just caved,” he said.

Regulators will likely be studying fares and overlapping routes, particularly in places reminiscent of Florida where the airlines have large operations.

“I feel they’re up against rather a lot,” Lopatka said of JetBlue and Spirit. “I feel there is nearly no likelihood they’ll have the opportunity to drag off the merger without some concessions.”

The Transportation Department, which might also have to log off, didn’t immediately comment.

Airlines have drawn scrutiny this 12 months from high-profile lawmakers including Sen. Bernie Sanders, I-Vt., as passengers faced a rise in flight cancellations and delays, partially driven by staffing shortfalls.

“I’m closely reviewing the JetBlue-Spirit merger for its impact on consumers and employees, and I expect the Department of Justice and Department of Transportation will conduct an objective investigation as well,” Sen. Ed Markey, a Democrat representing Massachusetts, where JetBlue has a big operation, said in an announcement

Get the latest Sports Updates (Soccer, NBA, NFL, Hockey, Racing, etc.) and Breaking News From the United States, United Kingdom, and all around the world.

Related articles


Recent articles