JetBlue, Spirit agree to end merger following block

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Update: 

• JetBlue Airways announced it reached a deal with Spirit Airlines to end their planned $3.8 billion merger. 
• The decision to nix the merger comes after a Massachusetts federal court blocked it earlier this year at the request of the U.S. Department of Justice. 
• JetBlue says it abandoned the merger because it was unlikely the two airlines would have been able to complete the acquisition prior to a July deadline. 
• JetBlue, which in a statement maintains a merger between the two airlines would have been beneficial, will pay Spirit a $69 million termination fee under the terms of the deal. 
• In a statement, Attorney General Merrick B. Garland praised the decision to terminate the merger while reiterating the DOJ believes it violated antitrust laws and harmed consumers.
• The DOJ and several states filed a lawsuit in March 2023 to block the proposed merger. 

JetBlue, Spirit merger overview:

• Who: The DOJ and attorneys general from the District of Columbia, Massachusetts and New York have filed a lawsuit seeking to block a proposed $3.8 billion JetBlue-Spirit merger.
• Why: They are concerned that the proposed merger would lead to fewer choices and higher prices for U.S. consumers.
• Where: The DOJ’s lawsuit was filed in Massachusetts federal court.

(March 15, 2023)

The U.S. Department of Justice (DOJ) last week filed a lawsuit seeking to block a proposed $3.8 billion JetBlue and Spirit merger.

JetBlue reportedly planned to pay $3.8 billion to buy Spirit Airlines, which would make the airline the fifth-largest behind United Airlines, Delta Airlines, American Airlines and Southwest Airlines.

The DOJ’s lawsuit was joined by the District of Columbia, Massachusetts and New York attorneys general. They allege the proposed merger would lead to fewer choices and higher prices for “tens of millions” of U.S. consumers.

DOJ: JetBlue, Spirit merger would burden travelers who rely on ultra-low-cost airlines

In a March 7 press conference, Attorney General Merrick Garland noted the proposed merger could affect consumers who rely on ultra-low-cost airlines.

“Those include working and middle class Americans who travel for personal as opposed to business reasons and who must pay their own way,” Garland said. “By acquiring Spirit, JetBlue will eliminate the largest ultra-low-cost carrier in the United States today.”

The DOJ’s lawsuit notes Spirit’s disruptive business model has resulted in increased competition and lower fares for hundreds of routes across the United States. The complaint alleges JetBlue intends to abandon the business model and charge higher prices.

“JetBlue’s plan would eliminate the unique competition that Spirit provides — and about half of all ultra-low-cost airline seats in the industry — and leave tens of millions of travelers to face higher fares and fewer options,” the DOJ’s lawsuit alleges.

JetBlue, Spirit say merger will ensure a competitive airline marketplace

JetBlue and Spirit have reportedly released a joint statement asserting the proposed merger is not intended to challenge the “Big Four” airlines. Instead, they claim that the merger will mean that consumers will not have to choose between inexpensive airfare and great service.

“Customers deserve a competitive airline marketplace and we will pursue this merger to ensure they get it, continuing to disrupt the legacy airlines with low fares and award-winning service that even the DOJ has applauded,” JetBlue CEO Robin Hayes says.

In November 2022, a group of Spirit Airlines customers filed a lawsuit challenging the proposed merger. They allege that, if it is allowed to proceed, the merger would “tend to create a monopoly” in the airline industry.

Do you think the proposed merger would result in higher prices for travelers? Join the discussion in the comments.

The JetBlue and Spirit merger lawsuit is United States of America, et al. v. JetBlue Airways Corp., et al., Case No. 1:23-cv-10511, in the U.S. District Court for the District of Massachusetts.

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