The Justice Department has filed an antitrust suit seeking to block JetBlue’s $3.8 billion acquisition of budget competitor Spirit Airlines, claiming it would raise airfare prices and harm consumers.
The suit filed on Tuesday alleged the merger would ‘eliminate the unique competition that Spirit provides’ and leave millions of air travelers facing ‘higher fares and fewer options.’
The Justice Department planned a press conference at 11.30am to announce an ‘antitrust enforcement action’ that was widely expected to address the suit.
In an interview with Good Morning America, JetBlue CEO Robin Hayes argued that the merger would help consumers, by positioning the airline to better compete with the four major carriers that together control 80% of the US market for air travel.
‘This is not Pepsi buying Coke, together we’re going to be eight to nine percent of the market,’ said Hayes. ‘Every time JetBlue flies in a market, fares go down, it’s actually called the JetBlue effect.
The Justice Department has filed an antitrust suit seeking to block JetBlue’s $3.8 billion acquisition of budget competitor Spirit Airlines
JetBlue CEO Robin Hayes (left) and Spirit CEO Edward M. Christie III (right) are seen above
In late July, JetBlue prevailed in a months-long bidding war for Spirit Airlines after the ultra-low-cost carrier accepted its offer over a competing bid from Frontier, as JetBlue threatened to pursue a hostile takeover.
JetBlue said in a statement that it accounted for the possibility of a lawsuit when it provided a timeline to close the deal in the first half of 2024, giving the companies time to fight the government in court.
The Transportation Department, which is also reviewing the deal, is expected to take parallel action to stop the planned merger, Bloomberg News reported.
JetBlue shares rose nearly 1% on Monday while Spirit shares closed down nearly 9%.
JetBlue Chief Executive Robin Hayes said on Monday he expected a government lawsuit to stop the deal and that the company would fight it, the Wall Street Journal reported.
‘My expectation is that we will get sued by the DOJ this week,’ Hayes was quoted as saying. ‘My sense is they came to the table with their minds made up.’
Also on Monday, Florida Attorney General Ashley Moody said JetBlue and Spirit had struck a deal with the state to significantly boost seat capacity at Florida airports and add 1,000 jobs in the state to resolve state antitrust concerns about the planned transaction.
A JetBlue airliner takes off past Spirit Airlines planes at Fort Lauderdale-Hollywood International Airport in a file photo
If completed, the merged airline must increase seat capacity by at least 50% in both Fort Lauderdale and Orlando airports and must increase aggregate seat capacity at all other Florida airports in which either currently operate by at least 50%, Moody said, adding the ‘commitments will bring hundreds of new daily flights to Florida.’
The companies have offered to sell Spirit’s holdings in Boston and New York, along with some assets in Florida, in a bid to ease the government’s antitrust concerns.
JetBlue is also awaiting the outcome of a separate lawsuit filed by the US Justice Department which asks the court to force JetBlue and American to scrap its Northeast Alliance. A trial in the case was held last year.
JetBlue’s acquisition of Spirit had been expected to face a tough antitrust review from the beginning because the four biggest airlines – American Airlines, United Airlines , Delta Air Lines and Southwest Airlines – control 80% of the U.S. domestic market.
JetBlue has argued that the merger, which would create the fifth largest U.S. airline with a market share of 9%, would allow it to better compete with the legacy airlines.
Source: | This article originally belongs to Dailymail.co.uk
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