JetBlue Airways and Spirit Airlines announced on Monday that they would not seek to overturn a court ruling that blocked their planned $3.8 billion merger. The decision is a big win for the Biden administration, which has sough to limit corporate consolidation.
Backing out of the agreement will cost JetBlue. Under the terms of the deal, it has to pay Spirit a breakup fee of $69 million and Spirit’s shareholders $400 million.
A federal judge in Boston blocked the proposed merger on Jan. 16, siding with the Justice Department in determining that the merger would reduce competition and give airlines more leeway to raise ticket prices. The judge, William G. Young of U.S. District Court for the District of Massachusetts, noted that Spirit played a vital role in the market as a low-cost carrier and that travelers would have fewer options if JetBlue absorbed it.
The Justice Department hailed the termination of the deal on Monday, calling it “a victory for U.S. travelers who deserve lower prices and better choices.”
Don’t let anyone tell you hipster antitrust has no teeth.
Good. Now go after the big companies that need to be broken up.
On the FTC side, Lina Khan is on a roll. Every little bit of the tide turning creates momentum, and thank god we have the EU setting an example, too.
Damn, they could have achieved the dream of uniting to form the worst airline possible.
Yeah. If the alternative is Spirit’s death, good; it is deserved. It will create an actual market opening for a newcomer. Anyone who complains this won’t happen doesn’t truly believe in capitalism after all.
No, I am pretty sure that the resulting airline would then need to merge with Rianair to achieve that dream.
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JetBlue Airways and Spirit Airlines announced on Monday that they would not seek to overturn a court ruling that blocked their planned $3.8 billion merger.
The Justice Department hailed the termination of the deal on Monday, calling it “a victory for U.S. travelers who deserve lower prices and better choices.”
“We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently,” JetBlue’s chief executive, Joanna Geraghty, said in a statement on Monday.
“JetBlue has made several valiant attempts and has stretched this deal out as a long as possible — they had to provide certainty for their shareholders and employees,” said Brad Haller, a partner at the consulting firm West Monroe.
Spirit’s chief executive, Ted Christie, said in a statement Monday that “given the regulatory uncertainty, we have always considered the possibility of continuing to operate as a stand-alone business” and have been thinking of ways to bolster profits.
Buying the airline would quickly allow other carriers to become bigger at a time when airport gates and takeoff and landing slots are in short supply in many popular U.S. destinations.
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