US authorities are suing JetBlue’s takeover of Spirit Airlines
US agencies and states have sued to block JetBlue Airways’ proposed $3.8 billion acquisition of Spirit Airlines, saying it would reduce competition in the passenger airline industry.
The U.S. Department of Justice, the District of Columbia and the states of New York and Massachusetts filed an antitrust lawsuit Tuesday, arguing that the deal would “eliminate” competition from Spirit, the fast-growing low-cost carrier, resulting in higher fares would result in fewer options for customers.
The lawsuit comes after JetBlue won a bidding war with Frontier Airlines to acquire Spirit last July. Spirit and Frontier previously warned that a deal with JetBlue would be rejected by competition authorities.
“This acquisition would bring together two particularly close and fierce head-to-head competitors,” the plaintiffs said in a court filing. “On dozens of routes serving tens of millions of passengers each year, JetBlue and Spirit are two of the most significant competitors today, and they have such large combined market shares that the transaction is allegedly illegal.”
JetBlue and Spirit said they would “continue to move forward” with their merger plans despite the lawsuit.
“Customers deserve a competitive airline marketplace and we will drive this merger to ensure they get it,” said Robin Hayes, JetBlue Chief Executive.
The combined entity would create the fifth-largest US airline, and the deal represented the latest consolidation in an industry that has seen a string of mega-mergers over the past 15 years.
Hayes argued that the combination with Spirit would create a new rival for the industry’s traditional “big four” — American, United, Delta and Southwest — and contribute to lower fares by “disrupting” pricing in the industry.
The four largest US airlines and their regional affiliates control 80 percent of US routes, while JetBlue estimated that the combination with Spirit would control about 9 percent of the market.
JetBlue is involved in a separate antitrust case in which US agencies and states are trying to block agreements with American Airlines that would consolidate the companies’ Boston and New York operations.
Merrick Garland, US Attorney General, said the JetBlue Spirit transaction would “exacerbate the problems created by this alliance” but that the proposed acquisition would have violated US antitrust laws even without the agreement with American Airlines.
Analysts said a connection between Frontier and Spirit would have an easier path to regulatory approval, but saw greater potential benefits for a JetBlue-Spirit deal.
Major US airlines were among the few global airlines to have been consistently profitable in the years leading up to the pandemic. Some analysts and executives expect the industry in Europe to follow the US with a spate of mergers as the impact of the coronavirus wears off.
Ryanair CEO Michael O’Leary is among them and has long predicted that the European industry would shrink to a handful of big players.
https://www.ft.com/content/8257978c-a44e-4628-ba89-6513421d5757 US authorities are suing JetBlue’s takeover of Spirit Airlines