South Florida Based “Spirit” Was To Be Acquired By JetBlue. Not Happening.
BY: LITIGATION DESK | BocaNewsNow.com
BOCA RATON, FL (BocaNewsNow.com) (Copyright © 2024 MetroDesk Media, LLC) — The planned takeover of Miramar-based Spirit Airlines by JetBlue isn’t happening. A federal judge in Boston Tuesday siding with the Department of Justice by blocking the merger. The reason: consumers will end up losing and promises of lower fares by combining the airlines are unlikely to become reality.
BocaNewsNow.com is publishing the entire 100+ page response by the federal court judge, below. Here’s the abbreviated version:
“From the Defendant Airlines’ perspective, organic growth is too slow, as there are too few new aircraft available to meet industry demand. JetBlue’s inorganic growth through acquisition of Spirit’s sizable fleet of retrofittable aircraft –- of the same type — largely solves this problem and is a tried-and-true growth strategy in this industry.
A post-merger, combined firm of JetBlue and Spirit would likely place stronger competitive pressure on the larger airlines in the country. 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. Spirit’s unique position in the domestic scheduled passenger airline industry would be exceedingly difficult for another airline, or a combination of other airlines, to replicate, even with low barriers to entry and the dynamic nature of the industry inasmuch as they face the same, industry- wide aircraft sourcing issues.
The Clayton Act was designed to prevent anticompetitive harms for consumers by preventing mergers or acquisitions the effect of which “may be substantially to lessen competition, or tend to create a monopoly.” 15 U. S. C. § 18. Summing it up, if JetBlue were permitted to gobble up Spirit -– at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline. It would further consolidate an oligopoly by immediately doubling JetBlue’s stakeholder size in the industry.
Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier. While it is understandable that JetBlue seeks inorganic growth through acquisition of aircraft that would eliminate one of its primary competitors, the proposed acquisition, in this Court’s attempt to predict the future in murky times, does violence to the core principle of antitrust law: to protect the United States’ markets –- and its market participants — from anticompetitive harm.
Accordingly, for the reasons below, the Court rules that the proposed merger, as it stands, would substantially lessen competition in violation of the Clayton Act. The July 28, 2022 proposed merger, therefore, is enjoined.”
It is not immediately what now happens to Spirit which was seeking a suitor. Like JetBlue, it is a dominant carrier at Fort Lauderdale-Hollywood International Airport. Read the complete judicial response, below.
