Spirit takeover blocked

JETBLUE’S $3.8bn bid to buy rival Spirit Airlines has been blocked by William Young, a US district judge in Boston, on anti-competitive grounds. Young said he agreed with the US Justice Department and several state attorneys general who had sued in an antitrust lawsuit in March 2023 to stop the deal, believing that eliminating a rival would increase fares.

The takeover would have created the fifth-largest airline in the US. JetBlue believed the deal would have allowed it to better compete against rivals such as Delta, American and United, adding 202 Airbus aircraft to its fleet overnight. In a joint statement, the airlines said: “We disagree with the US District Court’s ruling. We believe that our combination is the best opportunity to increase much-needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant US carriers. We are reviewing the court’s decision and are evaluating our next steps as part of the legal process.”

Florida-based Spirit is now in a precarious situation after its shares plunged by over 50% overnight. The airline lost $158m during the third quarter of 2023, citing “softer demand for our product and discounted fares in our markets.” Ongoing supply chain issues and increased operating expenses were also blamed.

TD Cowen aviation analyst and managing director Helane Becker said that the likely route now for the Florida-based airline is to search for another buyer, “but a more likely scenario is a Chapter 11 filing, followed by a liquidation.” One other possibility is another bid from Frontier Airlines, which had originally offered Spirit a cash-and-stock deal in 2022, only for it to be rejected for JetBlue’s more lucrative all-cash offer.

The administrative court’s decision could also prove a headache for Alaska Airlines, which recently announced that it intends to buy Hawaiian Airlines in a $1.9bn deal (see Airliner World, February 2024). (Photo Spirit Airlines)