Judge blocks $3.8B JetBlue-Spirit merger, cites ‘anticompetitive harm’

A federal judge on Tuesday blocked JetBlue Airways’ proposed $3.8 billion acquisition of budget carrier Spirit Airlines, agreeing with the Justice Department that the deal would hurt the availability of low-cost air travel tickets.

U.S. District Judge William Young wrote that the proposed merger between JetBlue and Spirit “does violence to the core principle of antitrust law: to protect the United States’ markets – and its market participants – from anticompetitive harm.”

Young also wrote, “The consumers that rely on Spirit’s unique, low-price model would likely be harmed.”

Spirit’s stock plunged on the news, falling as much as 55% during trading Tuesday afternoon before closing down 47%. Dow Jones Market Data group noted that Spirit’s stock neared all-time lows after the ruling and experienced its largest percentage decrease on record. JetBlue’s stock closed 4.9% higher on the news.

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JetBlue and Spirit can appeal the judge’s ruling if they still wish to pursue the merger.

The ruling comes as a rare win for the Biden administration’s efforts to block mergers and acquisitions that it views as harming competition. 

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The DOJ was joined by Democratic attorneys general from six states and the District of Columbia in arguing that a JetBlue-Spirit merger would reduce the number of flights available and result in higher prices for millions of traveling Americans.

They argued that letting JetBlue absorb its ultra-low-cost rival would “extinguish a vital source of low cost competitive disruption along more than 375 routes,” causing nearly $1 billion of net harm annually to consumers. 

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OAKLAND, CALIFORNIA – JULY 28: A Spirit Airlines plane takes off from Oakland International Airport on July 28, 2022 in Oakland, California. JetBlue Airways announced plans to purchase low-cost airline Spirit Airlines, a merger that would create the ( (Photo by Justin Sullivan/Getty Images) / Getty Images)

Spirit was the first domestic U.S. airline to let passengers choose what features of their flights they pay for, such as checked bags and food and drink service – a model that caused competing airlines to cut prices, the DOJ said.

JetBlue’s lawyers argued the case was a “misguided” challenge to a merger between the sixth- and seventh-largest airlines in the U.S. that control less than 8% of the domestic market combined. 

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For comparison, the four largest U.S. carriers – United Airlines, American Airlines, Delta Air Lines and Southwest Airlines – control 80% of the market following a series of previous airline mergers that received approval from the federal government.

This is a developing story. Please check back for updates.

Reuters contributed to this report.