The United States (US) Justice Department filed a lawsuit today (March 7) to stop JetBlue Airways Corp from buying Spirit Airlines Inc, saying the planned US$3.8-billion merger “would put travel out of reach for many cost-conscious travelers”.
The complaint, which was filed in Boston federal court, said that JetBlue planned to remove 10 per cent to 15 per cent of seats from every Spirit plane.
“Fewer seats means fewer passengers – and higher prices for those who can still afford to make their way onto the plane. This is unlikely to stop business travelers flying on corporate expense accounts, but would put travel out of reach for many cost-conscious travelers,” the complaint said.
SPIRIT SHARES UP
The lawsuit is the latest attempt by the Biden administration to push back against further consolidation in industries which had previously undergone extensive merger activity. It also comes as the administration takes other steps it says are aimed at increasing competition in the US airline industry.
Massachusetts, New York and Washington, D.C., joined the Justice Department’s complaint.
Spirit shares were up about 1.8 per cent on Tuesday after dipping the previous day on expectations of a lawsuit. JetBlue shares were little changed.
JetBlue had previously said it expected the deal to close in early 2024, leaving time for litigation if necessary. It did not immediately respond to a request for comment on Tuesday.
JetBlue prevailed in a months-long bidding war for Spirit Airlines after the ultra-low-cost carrier accepted its offer in late July.
From the beginning, JetBlue’s acquisition of Spirit had been expected to face a tough antitrust review because the four biggest carriers – American Airlines, United Airlines, Delta Air Lines and Southwest Airlines – control 80 per cent of the US domestic market.
JetBlue Chief Executive Officer Robin Hayes said on Monday he expected a government lawsuit.
JetBlue has argued that the merger, which would create the fifth-largest US airline with a market share of nine per cent, was good for competition and would allow it to better compete with the big airlines.
The companies have offered to sell Spirit’s holdings in Boston and New York, along with some assets in Florida, in a bid to ease the government’s antitrust concerns.