☀️☕️ Spirited Away, JetBlue Off

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Spirited Away, JetBlue Off

After ten months, a federal judge in Boston has blocked JetBlue Airways' agreed $3.8 billion acquisition of Spirit Airlines to create America’s 5th largest airline. 

The antitrust ruling agreed with the US Department of Justice that the deal would harm consumers relying on Spirit's low-cost mode and lead to fewer flights and higher prices. 

JetBlue's shares were up 5% on the news, but Spirit Airlines, struggling with profitability challenges, saw its shares drop 47% with serious questions hanging over its future.

..... ▷ JetBlue had attempted to address the DOJ’s concerns by agreeing to divest gates and slots at key airports.

JetBlue's original defence was that the merger would create a more powerful competitor to the Big Four, which already controls 80% of the market. This would bring down fares overall.

JetBlue and Spirit mostly don't directly compete with one another, and hence, they claimed at the time the merger wouldn't significantly decrease competition. 

..... ▷ When JetBlue first made the hostile takeover🎓 bid in 2022, after Spirit shareholders had rejected a friendly merger with Frontier, the board of directors of Spirit rejected it. 

In their rejection, they claimed:

This is basically exactly what the judge just agreed with the Justice Department about.

..... ▷ Spirit’s board eventually relented after several rounds of bid hikes and modifications and agreed to the terms, only to have the DOJ filed an antitrust lawsuit last March, the first time in over 20 years that it has sought to block an airline merger.

This ruling is seen as a victory for the Biden administration's efforts to prevent increased concentration in the airline industry and its broader push to enhance antitrust enforcement. 

Both companies can still appeal the decision.

(MFM: Trustbusters take flight! "The Spirit Effect")

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