JetBlue’s $3.8 billion acquisition of Spirit Airlines blocked by judge in antitrust trial

US District Judge William G. Young sided with the federal government and said the merger would harm cost-conscious travelers by eliminating the nation’s dominant deep-fare discount airline and drive up prices across the industry. Play Video

“If JetBlue were permitted to gobble up Spirit — at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,” Young wrote Tuesday. “Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.”

The ruling follows a closely watched trial in November, where lawyers for the government argued that the merger would eliminate a key incentive for bigger airlines to offer budget-friendly fares. It represents a major win for the Biden administration’s antitrust enforcers, who have taken a more aggressive approach to mergers and are currently reviewing Alaska Air Group Inc.’s proposed $1.9 billion acquisition of Hawaiian Holdings Inc. 

Spirit’s shares plunged 47% Tuesday in New York, the biggest decline since the stock began trading more than a decade ago. JetBlue climbed 4.9%.

JetBlue and Spirit contended that consolidation is the only way smaller airlines can effectively compete with the dominant carriers. In a joint statement, the companies said they “are evaluating our next steps as part of the legal process.”

The companies can either appeal the ruling or abandon the deal, though challenging the judge’s decision would be a longshot, especially with the merger agreement set to expire in six months. 

Strategy Rebuffed

Tuesday’s ruling was a major rebuff to JetBlue’s growth strategy under Chief Executive Officer Robin Hayes, who surprised investors last…