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JetBlue’s $3.8 billion buyout of Spirit Airlines is blocked by judge citing threat to competition

Jan 16, 2024, 12:25 PM

FILE - A JetBlue airplane is shown at John F. Kennedy International Airport in New York, March 16, ...

FILE - A JetBlue airplane is shown at John F. Kennedy International Airport in New York, March 16, 2017. A federal judge is siding with the Biden administration and blocking JetBlue Airways from buying Spirit Airlines, saying the $3.8 billion deal would reduce competition. The Justice Department sued to block the merger, saying it would drive up fares by eliminating Spirit, the nation’s biggest low-cost airline. (AP Photo/Seth Wenig, File)

(AP Photo/Seth Wenig, File)

DALLAS (AP) — A federal judge is siding with the Biden administration and blocking JetBlue Airways from buying Spirit Airlines, saying the $3.8 billion deal would reduce competition.

The Justice Department sued to block the merger, saying it would drive up fares by eliminating Spirit, the nation’s biggest low-cost airline.

JetBlue argued that the deal would help consumers by making JetBlue a stronger competitor against bigger rivals that dominate the U.S. air-travel market.

U.S. District Judge William Young, who presided over a non-jury trial last year, said in the ruling Tuesday that the government had proven that the merger “would substantially lessen competition” and violated a century-old antitrust law.

“Spirit is a small airline. But there are those who love it. To those dedicated customers of Spirit, this one’s for you,” Young wrote.

Shares of Spirit Airlines Inc. plunged more than half almost immediately, while JetBlue shares gained 8%.

For JetBlue, the ruling was its second major setback in federal court in less than a year. Another judge in the same Boston courthouse killed a partnership in the Northeast between JetBlue and American Airlines.

JetBlue, the nation’s sixth-largest airline by revenue, now must come up with another growth plan. That will be an assignment for incoming CEO Joanna Geraghty. Next month she will replace Robin Hayes, who had engineered both of the deals that have now been blocked in court.

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JetBlue’s $3.8 billion buyout of Spirit Airlines is blocked by judge citing threat to competition