JetBlue‘s merger with Spirit Airlines was blocked by a federal judge on Tuesday, putting an end to a combination that would have seen JetBlue absorb Spirit and scrap the ultra-low-cost carrier’s brand.
In the ruling, Judge William G. Young of U.S. District Court in Massachusetts found that the merger was anti-competitive, agreeing with a U.S. Department of Justice argument that said the merger violated antitrust laws.
The decision was a major blow to JetBlue, which also saw its Northeast Alliance with American Airlines scrapped in antitrust court in 2023.
JetBlue had argued that it needed Spirit’s aircraft and crew members in order to supercharge its growth to a size that would allow it to compete with bigger U.S. carriers.
It was not immediately clear whether JetBlue plans to appeal the decision.
Share prices for Spirit fell more than 50%, while JetBlue was up more than 5%.
Judge Young’s ruling comes more than five weeks after a month-long trial closed on Dec. 5 in Boston.
Want more airline-specific news? Sign up for TPG’s free biweekly Aviation newsletter.
Throughout the initial bid and the trial, JetBlue argued that by absorbing Spirit, it could double its size and compete more effectively with the four major U.S. airlines — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines — that together control about 80% of the U.S. air travel market.
Daily Newsletter
Reward your inbox with the TPG Daily newsletter
Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts
The DOJ, however, argued that the merger would hurt the most price-sensitive consumers, with Spirit’s elimination from the market on some routes causing prices to rise. The department sued in March to stop the merger.
While the DOJ has challenged previous mergers between airlines, many were settled. A series of bankruptcies and industry consolidations that led to the current dynamic with four major U.S. airlines — many of which were ultimately allowed by the DOJ — has created a playing field where smaller entrants must merge to survive and prosper, according to JetBlue’s lawyers.
During the trial, JetBlue and Spirit also argued that if Spirit were to stop existing, other ultra-low-cost carriers — such as Frontier, Allegiant, Avelo and Breeze, among others — would fill the void. During the trial, executives from both airlines testified that Spirit, which has struggled to return to profitability following the onset COVID-19 pandemic, cannot continue operating in its current form as an ultra-low-cost carrier. This means that even without the merger, the airline would cease to exist as the market force it is today.
The ultimate question at the heart of the trial boiled down to whether the risk of raising the lowest fares on some routes through Spirit’s exit would be worth the potential to lower the average airfare across the broader market by putting more pressure on the major carriers.
The DOJ won a similar antitrust case last year against JetBlue’s Northeast Alliance with American Airlines. That trial involved one of the four major U.S. airlines, however, and occurred while the Spirit merger was on the table.
This is a developing story and will be updated with more news.
