DOJ files Antitrust Suit Over JetBlue, Spirit Merger

The $3.8-billion deal could be blocked over concerns about reduced competition

By
Nathan Reiff
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Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
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Updated March 07, 2023
A JetBlue airplane takes off from Licenciado Gustavo Diaz Ordaz International Airport (PVR) in Puerto Vallarta, Jalisco state, Mexico,

Cesar Rodriguez/Getty Images

Key Takeaways

  • The Justice Department sued to block a planned $3.8-billion business combination between JetBlue and Spirit Tuesday.
  • The two companies argue that a merger will bolster network resiliency and lead to hundreds of millions of dollars in reduced costs.
  • JetBlue and Spirit had been anticipating a legal challenge for the last few weeks.

The Justice Department (DOJ) sued Tuesday to block JetBlue Airways Corp. (JBLU) from completing a $3.8-billion takeover of Spirit Airlines Inc. (SAVE).

The DOJ expressed concerns for budget travelers, the main customer base of low-cost carrier Spirit. The government argues that these travelers will have fewer options if the merger is allowed to move forward.

The two companies have reportedly been expecting legal action for the past few weeks. For his part, JetBlue's CEO Robin Hayes said antitrust regulators "came to the table with their minds made up" on stopping the merger.

Airlines Say Merger Will Boost Resiliency, Cut Costs

JetBlue and Spirit agreed in mid-2022 to combine to form the world's fifth-largest airline. The combination would have a market share of about 9%, placing it behind larger rivals such as American Airlines Group Inc. (AAL) and Delta Air Lines Inc. (DAL).

Spirit is a bargain airline that charges fees for add-ons, while JetBlue offers a higher-end customer experience. JetBlue plans to reconfigure seating plans and repaint Spirit aircraft.

Still, there are reasons to believe the deal may go through. Florida Attorney General Ashley Moody said this week that her office's concern had been resolved by a settlement agreement with the two companies that she expects to bring new jobs to the state.

Executives at both JetBlue and Spirit say that the merger would best position them to compete against larger rivals. They've also told antitrust regulators that the merger will benefit customers through cost savings, additional service to smaller cities, and boosted resiliency during weather and other flight disruption events.

JetBlue and American also face a separate DOJ suit about the two companies' plans to sell tickets on each other's flights. The Department alleges that the deal makes the two airlines collaborators, reducing competitive pressure.

If the deal is blocked by the DOJ, JetBlue has agreed to pay Spirit $400 million in breakup fees.

Article Sources
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  1. Reuters. "JetBlue, Spirit deal faces 'high likelihood' of U.S. lawsuit."

  2. Wall Street Journal. "JetBlue, Spirit Brace for Justice Department Lawsuit to Block Airlines’ Merger."

  3. AP. "US Sues to Block JetBlue From Buying Spirit Airlines."

  4. BusinessWire. "JetBlue and Spirit to Create a National Low-Fare Challenger to the Dominant Big Four Airlines."

  5. Bloomberg. "JetBlue-Spirit Air Deal Faces DOJ Antitrust Suit This Week."

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