A federal judge passed down the ruling against the two airlines in a 110-page decision, with both carriers “permanently enjoined” from merging per their agreement.
Ultra-Low-Cost Flyers Hurt Most, While JetBlue Could Increase Prices
The ruling was made by Judge William G. Young, of the U.S. District Court in Boston, Massachusetts. In his decision, Young found that those who depend on the ultra-low-cost carrier model could be hurt worst if the merger were allowed to move forward.
“A post-merger, combined firm of JetBlue and Spirit would likely place stronger competitive pressure on the larger airlines in the country,” Young wrote in the decision. “At the same time, however, the consumers that rely on Spirit’s unique, low-price model would likely be harmed. The Defendant Airlines currently compete head-to-head throughout the country, and that competition, particularly Spirit’s downward pressure on prices, benefits all consumers.”
In addition, the judge determined that JetBlue would abandon their low-cost-carrier model if the merger would be approved. Documents leaked in August 2023 suggested JetBlue would raise prices by up to 40% post-merger. If it were allowed to move forward, the combined airline would have captured just over 10% of the U.S. domestic market and become the fifth largest carrier.
“It [the merger] would further consolidate an oligopoly by immediately doubling JetBlue’s stakeholder size in the industry,” the decision reads. “Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.”
The merger was the final major project of retiring JetBlue chief executive Robin Hayes, who took his campaign to both the Spirit board and shareholders. This decision comes days after JetBlue announced a prepayment of $0.10 per share to Spirit shareholders, as per their merger agreement. With the collapse, JetBlue could be on the hook for a $70 million break-up fee, as well as other fees to shareholders.
The defeat is the second major blow to JetBlue in the past seven months, after the unraveling of the Northeast Alliance with American Airlines. Despite working through a plan to offer reciprocal elite benefits and codeshare flights, the two were forced to stop everything by July 21, 2023.
Neither JetBlue nor Spirit have publicly commented on the decision.
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Feature image courtesy: JetBlue
Source: frugal travel guy