BOSTON, US – JetBlue’s $3.8 billion plan to acquire Spirit Airlines has been dealt a major blow as a federal judge ruled against the merger on Tuesday. The decision comes after the US Justice Department, in a bid to protect competition and prevent consumer harm, filed a lawsuit last year to block the deal.
Following the announcement, Spirit Airlines shares plummeted by 50.1 percent, while JetBlue saw a 5.0 percent increase in its stock value. In a joint statement, both companies expressed their disagreement with the ruling by District Court Judge William Young in Boston. They stated that they are currently reviewing the decision and evaluating their legal options moving forward.
JetBlue and Spirit Airlines had previously defended the merger, emphasizing their commitment to extending the “JetBlue Effect” that aims to push larger airlines to offer more affordable fares. The airlines argued that their combination would benefit customers and enhance their competitive position against dominant carriers in the US market.
However, Judge Young highlighted concerns over the potential impact on cost-conscious travelers who rely on Spirit’s low fares. He emphasized that the airline industry has become increasingly concentrated due to previous mergers, and the proposed acquisition would go against the core principle of antitrust law, which is to protect markets and market participants from anti-competitive practices.
Last year, Attorney General Merrick Garland voiced his opposition to the merger, stating that it would limit choices and drive up ticket prices for travelers across the country. He specifically emphasized the detrimental effect it would have on passengers who depend on ultra-low-cost carriers.
This setback comes after JetBlue’s decision earlier this year to wind down its alliance with American Airlines, following a US court ruling that deemed the joint venture anti-competitive.
As the airline industry faces increasing consolidation, legal battles like these highlight the ongoing debate around the balance between competition and consumer welfare. The outcome of this case could have significant implications for the future of mergers within the industry.
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