Terminal A at LaGuardia International Airport for JetBlue and Spirit Airlines in New York.
Leslie Josephs | CNBC
A federal judge blocked JetBlue Airways' purchase of budget rival Spirit Airlines, a major win for the Biden-era Justice Department, which sued to stop the merger, claiming it would raise prices for some of the most price-sensitive consumers.
JetBlue's proposed purchase of Spirit at a discounted price of $3.8 billion would have created the nation's fifth-largest airline, a deal the airlines said would help it grow better and compete against larger rivals like Delta and United.
The decision, issued on Tuesday by a federal judge in Boston, represents a victory for the Justice Department, which has aggressively sought to block deals it considers anticompetitive.
“JetBlue's plan would eliminate the unique competition offered by Spirit — and about half of all ultra-low-cost airline seats in the industry — and leave tens of millions of travelers facing higher prices and fewer choices,” the Justice Department claimed in its report. Lawsuit filed in March.
Spirit shares tumbled after the decision was announced and fell by 60%, while JetBlue shares fluctuated between gains and losses.
None of the airlines immediately commented on the decision.
See chart…
Spirit Airlines and JetBlue Airways shares rise after a federal judge blocked the carrier's proposed merger.
JetBlue said access to Spirit's similar fleet of Airbus aircraft will allow it to grow quickly when planes and pilots are in short supply, growth it says it needs to compete with larger airlines. Previous years of consolidation left United, Delta, American and Southwest controlling about three-quarters of the domestic market.
The decision leaves New York-based JetBlue grappling with next steps, as it tasks incoming CEO Joanna Geraghty with steering the airline on a new path. Geraghty was announced as CEO Robin Hayes' successor after he said earlier this month that he would retire.
The airline operates in extremely congested airspace in New York and other cities, and had planned to use Spirit as a way to reach more routes and passengers.
JetBlue planned to redesign its yellow Spirit planes by removing branding and seats from overcrowded planes to provide more of a full-service model.
Spirit has grown rapidly in recent years by offering cheap rates and fees for everything else from seat assignments to carry-on luggage.
This is breaking news. . Please check back for updates
“Beer aficionado. Gamer. Alcohol fanatic. Evil food trailblazer. Avid bacon maven.”