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

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

Joe Raedle | beautiful pictures

JetBlue Airways finally won Spirit Airlines with a $3.8 billion takeover deal. Now it needs to win over antitrust regulators.

New York-based airline robbed Spirit Frontier Airlines with an all-cash offer that beat the cash and stock deal the two discount airlines made earlier this year. Hours after Spirit and Frontier said they had terminated a merger deal that lacked shareholder support, Spirit said it had agreed to sell itself to JetBlue.

JetBlue said it expects to win 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 sign off, it means Spirit is ultimately, a brand with become a breakthrough about the outrage of discount air travel, where passengers trade creature comforts like standard legroom, snacks, and free hand luggage for cheap fares.

Will regulators allow an ultra-low-cost carrier to get in during the hottest inflation in decades and reshape JetBlue’s image to resemble larger airlines?

Legal barriers are high. President Joe Biden’s Justice Department and has vowed to cancel any transactions that could harm competition. Last year, it sued to block JetBlue’s alliance with American Airlines In the northeast. A trial will begin at the end of September.

JetBlue is optimistic. The DOJ’s lawsuit accuses Americans of being able to tame JetBlue and says the union, which allows American and JetBlue to coordinate routes at busy airports serving New York and Boston, is like “a merger across the globe” reality”.

JetBlue CEO Robin Hayes said that combining Spirit and JetBlue, which would become the country’s fifth-largest airline, would create a strong competitor to the four major US carriers. States: 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 national, low-cost, high-quality airline to compete on a national scale with the next generation airlines,” says Hayes. redundant,” Hayes said in an interview. “By merging JetBlue and Spirit together, we can do it much faster than we could do it alone.”

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

The Justice Department has signed off on the airline merger, though not without some legal battles. For example, the merger of American Airlines and US Airways in 2013 was approved later that year after the department sued to stop the deal.

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

Without that, “there would be a public perception that [the Justice Department] just got caved,” 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 it a lot,” Lopatka said of JetBlue and Spirit. “I think there’s almost no chance that they could do the merger without some concessions.”

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