JetBlue has won the battle for Spirit. Now he has to win Biden’s Justice Department

JetBlue Airlines and Spirit Airlines are seen on the departures board at Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

JetBlue Airways eventually won Spirit Airlines with a $3.8 billion takeover deal. Now he has to convince antitrust regulators.

The New York-based airline snatched Spirit from Frontier Airlines with an all-cash offer that torpedoed the cash and stock deal the two low-cost airlines struck earlier this year. Hours after Spirit and Frontier said they had ended their merger deal, which lacked shareholder support, Spirit said it agreed to sell itself to JetBlue.

JetBlue said it expects to get regulatory approval in the fourth quarter of next year or the first three months of 2024. The carriers expect the deal to close in the first half of 2024. .

If regulators approve, it would spell the end of Spirit, a brand that has become a beacon on the indignities of discount air travel, where passengers trade in comforts such as standard legroom, snacks and luggage. free cabin for a cheap fare.

Will regulators allow an ultra-low-cost airline to be sucked into the hottest inflationary streak in decades and reshaped in the image of JetBlue, which is more like the big carriers?

The regulatory hurdle is high. President Joe Biden’s Justice Department and pledged to stamp out any deal that could harm competition. Last year, he sued to block JetBlue’s alliance with American Airlines in the northeast. A trial is due to begin at the end of September.

JetBlue is optimistic. The DOJ lawsuit alleges American could dominate JetBlue and says the alliance, which allows American and JetBlue to coordinate routes at busy airports serving New York and Boston, amounts to “a de facto merger.”

JetBlue CEO Robin Hayes said a combination of Spirit and JetBlue, which would become the nation’s fifth-largest airline, would create a strong competitor for the big four US carriers: American, Delta, United and Southwest. After more than a decade of consolidation, these carriers control about three quarters of the US market.

“The best thing we can do to make the industry more competitive is to create a truly national, low-cost, high-quality airline to compete on a more national scale with these legacy airlines,” Hayes said in a statement. interview. “By merging JetBlue and Spirit together, we are able to do this much faster than we would alone.”

The American declined to comment. The Justice Department did not immediately respond to a request for comment.

The Justice Department approved the airline mergers, but not without some legal battles. The combination of American Airlines and US Airways in 2013, for example, was approved at the end of that year after the department sued to end the deal.

But it will likely force JetBlue and Spirit to divest some of their assets in the process, said John Lopatka, a law professor specializing in antitrust law at Penn State Law.

Without it, “the public would have the impression that [the Justice Department] just gave in,” he said.

Regulators will study fares and specific city pairs, especially where airlines have large operations like Florida in the case of both carriers and the Northeast for JetBlue.

“I think they’re up against a lot,” Lopatka said of JetBlue and Spirit. “I think there’s almost no chance they can pull off the merger without some concessions.”

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