A federal judge has blocked JetBlue Airways’ $3.8 billion purchase of Spirit Airlines, siding with President Joe Biden’s administration and stating that the transaction would reduce competition. The U.S. Justice Department had sued to block the merger, claiming it would lead to increased fares by eliminating Spirit, the country’s largest low-cost airline.
JetBlue expressed its disagreement with the ruling and is considering the possibility of appealing it. The airline argued that the deal is necessary for them to better compete with larger rivals that dominate the U.S. airline market.
The ruling is seen as a victory for the Biden administration, which has been aggressively moving to prevent consolidation in various sectors, arguing that it harms consumers. The federal Justice Department contended that if JetBlue were allowed to buy Spirit, it would especially harm travelers who rely on Spirit’s low fares.
Shares of Spirit Airlines Inc. plunged by more than half following the ruling, while JetBlue gained 8%. This decision marks JetBlue’s second major setback in federal court in less than a year.
The ruling may also open the door to a potential new attempt to purchase Spirit by Frontier Airlines. The two low-cost airlines had announced a cash-and-stock deal in 2022, but JetBlue made an all-cash bid and won a bidding war for Florida-based Spirit.