A US federal judge on Tuesday ruled against JetBlue’s $3.8 billion takeover of low-cost carrier Spirit Airlines, saying the deal would reduce competition.
The decision comes after the US Department of Justice filed a lawsuit last year to block the merger, noting that the combination would harm consumers and violate antitrust laws.
Shares of Spirit Airlines plunged 50.1% after the announcement, while JetBlue rose 5.0%.
Both companies contested the ruling in a joint statement, saying they disagreed with the ruling by U.S. District Court Judge William Young in Boston.
“We are reviewing the court’s decision and assessing our next steps as part of the legal process,” they said.
JetBlue and Spirit previously defended the tie-up, saying they would continue to push to expand the “JetBlue Effect,” which has historically pushed larger airlines to set more affordable fares.
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On Tuesday, the airlines added that their combination would benefit customers and strengthen their ability to compete with dominant US carriers.
But in his ruling, Young said, “JetBlue plans to convert Spirit’s planes to the JetBlue layout and charge JetBlue’s higher average fares to its customers.”
“Elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares,” the judge added.
Young noted that the airline industry has become more concentrated due to mergers.
“The proposed takeover, in the Court’s attempt to predict the future in dark times, violates a basic principle of antitrust law: the protection of United States markets — and market participants — from anticompetitive harm,” he said.
Last year, Attorney General Merrick Garland told a news conference that the merger would “reduce choices and raise ticket prices for passengers across the country.”
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He added that the deal “will be particularly damaging to travelers who rely on what are known as ultra-low-cost carriers to fly.”
Last year, JetBlue also said it would end an alliance with American Airlines rather than challenge a US court ruling that found the joint venture anti-competitive.
Source: AFP