(New York) The American airline JetBlue announced on Monday that it would not acquire its competitor Spirit Airlines, a few weeks after an unfavorable court decision which threatened to prevent the formation of the fifth most important player in the sector in the United States.
The managers of the two companies estimated that they were not in a position to obtain the regulatory authorizations necessary for this union by the deadline they had set, namely the end of July.
As part of the agreement between the two groups, JetBlue will pay a termination fee of $69 million, it said in a press release.
“The decision announced by JetBlue today represents another victory in the work of the Department of Justice on behalf of American consumers,” commented Merrick Garland, Secretary of Justice, quoted in a press release.
“We will continue to vigorously enforce the country’s antitrust laws,” he said.
This renunciation constitutes a serious snub for JetBlue, which had outbid, in April 2022, an offer from the company Frontier Airlines, the first to have agreed with Spirit for a marriage, in February of the same year.
JetBlue had put $3.6 billion on the table, compared to $2.9 billion offered by Frontier, in order to absorb Spirit and overtake Alaska Airlines to become the fifth player in the industry in the United States.
After an initial rejection from Spirit’s board of directors, the New York company raised its offer to 3.8 billion and reached an agreement with Spirit’s managers in July 2022.
But in March 2023, the Department of Justice took action in a civil court in Boston, asserting that this merger would have negative effects for consumers.
This court ruled in his favor in mid-January, blocking the merger on the grounds that it risked leading to “on average higher prices for customers”.
Both companies appealed the judgment.
This is a new setback for JetBlue, which renounced in July 2023 a partnership with American Airlines on routes to and from Boston and New York, also rejected by a civil court in Boston in May 2023.
“We believed this union was worth pursuing because it would have created a low-cost national competitor to the ‘Big Four’, the four major airlines in the market (United, Southwest, American Airlines and Delta), commented Joanna Geraghty, CEO of JetBlue, quoted in the press release.
But, for Mr. Garland, this marriage “would have resulted in tens of millions of travelers being confronted with higher prices and fewer choices”, particularly on routes where the two companies currently compete.