Fresh Turbulence for jetBlue-Spirit Deal as US Authorities File Lawsuit
Several US authorities, including the DOJ, have filed a lawsuit against the proposed acquisition of Spirit Airlines (NK) by jetBlue (B6).
Several US authorities, including the DOJ, have filed a lawsuit against the proposed acquisition of Spirit Airlines (NK) by jetBlue (B6).
DALLAS - The proposed US$3.8bn acquisition of Spirit Airlines (NK) by jetBlue (B6) has hit another hurdle. The US Department of Justice (DOJ), the District of Columbia and the states of New York and Massachusetts have filed an antitrust lawsuit to block the deal, claiming the loss of NK would reduce competition and lead to higher prices and less choice for customers.
In the court filings, it called the deal “presumptively illegal” and added, “This acquisition would combine two especially close and fierce head-to-head competitors.
“On dozens of routes serving tens of millions of passengers each year, JetBlue and Spirit are two of the most significant rivals today, and they have such large combined market shares that the transaction is presumptively illegal.”
The DOJ said that should the acquisition proceed, B6 plans to remove between ten and 15 per cent of seats from all NK’s fleet. “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 deal is the latest in a long line of consolidation in the industry over the years. The DOJ argues that this has subsequently left customers with fewer options with regard to air travel, and this lawsuit has been made to counteract this. It is the latest attempt to reduce consolidation in specific industries by the Biden administration.
However, jetBlue disagrees with the plaintiff, stating that the merger would be good for competition and allow the airline to better compete with its bigger rivals. It hopes that the deal could be closed in early 2024.
In an attempt to appease the DOJ, B6 has said that it will sell NK gates at Boston (BOS) and New York (EWR and LGA). Five gates will also be made available to other ultra-low-cost carriers at Fort Lauderdale–Hollywood International Airport (FLL).
“We believe the DOJ has got it wrong on the law here and misses the point that this merger will create a national low-fare, high-quality competitor to the big four carriers which – thanks to their own DOJ-approved mergers – control about 80% of the US market,” said Robin Hayes, B6 CEO.
https://airwaysmag.com/spirit-reports-net-loss-of-us271m/
Featured Image: Spirit Airlines Airbus A320-271NK (N912NK). Photo: Nick Sheeder/Airways.
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