A federal court in Boston, in the northeast of the United States, on Tuesday rejected the proposed merger between the airlines Spirit and JetBlue, which was to create the fifth largest American company, estimating that the operation would be negative for American consumers.
According to the decision of Judge William Young , the operation would result in “on average higher prices for customers” and “the elimination of Spirit would harm cost-conscious travelers who rely on fares bottom” of the company.
The decision follows a complaint filed in March by the U.S. Department of Justice.
“The company created by the merger of JetBlue and Spirit would surely add competition to the largest companies in the country. However, at the same time consumers who rely on Spirit’s specific low-cost model would be affected,” Judge Young detailed in his decision.
In a joint statement, the two companies said they “disagree” with the court decision.
“We continue to believe that our merger is the best solution to improve the necessary competition and bring low prices and quality service to customers while increasing our ability to compete against dominant American carriers,” they write in the press release.
The two companies also specified that they were studying “the decision”. “We will evaluate what our options are within the legal process,” they stressed.
“This decision is a victory for the tens of millions of travelers who would have had to face higher prices and fewer choices,” Justice Minister Merrick Garland responded in a statement, adding that his department “will continue to rigorously enforce anti-concentration laws to protect American consumers.
The decision led to various reactions from the markets, at the close of Wall Stret, JetBlue stock ended up 4.91%, at $5.13, while that of Spirit fell sharply by 47.12%. , at $7.92.
The two low-cost airlines unveiled their project at the end of July 2022 after several months of twists and turns and bidding wars between JetBlue and its competitor Frontier to get their hands on Spirit. In the end, JetBlue won, with an offer of $3.8 billion.
The new entity would have placed itself behind the “Big Four” in number of seats offered. According to figures provided by the two partners at the time, it would have held 9% share of the American market.
But the Ministry of Justice estimated that the new group would lead to an increase in the average fare and reduce the offer offered to passengers.
He had already targeted JetBlue in 2021 regarding a partnership agreement concluded the previous year with American on routes to and from Boston and New York.
The low-cost airline abandoned this partnership at the beginning of July, after a court decision against it, preferring to focus on its merger with Spirit rather than appealing.
JetBlue notably agreed to pay termination fees of $70 million to Spirit and $400 million to Spirit shareholders if regulators veto the transaction.
