JetBlue Airways Set to Acquire Spirit Airlines Despite Weak Department of Justice Case
The Department of Justice (DoJ) has filed a weak case to block the merger between JetBlue Airways and Spirit Airlines. Despite this, the judge is likely to approve the merger, considering the current challenges in the domestic airline sector and the potential competitive threat posed by the combined airlines.
The merger is anticipated to create a low-cost threat to major airlines. Shareholders of Spirit Airlines are expected to receive over $30 in cash upon the closure of the deal. Additionally, the opportunity to roll over the cash into JetBlue’s beaten-down stock adds an interesting dimension to the deal.
"The airline industry needs more competition — the JetBlue/Spirit $SAVE $JBLU merger is just what travelers need" – says former U.S. assistant secretary of Transportation and a former U.S. undersecretary of Commerce under Bill Clinton and Barrack Obama respectively.— Housing information (@usaHousingInfo) November 16, 2023
Broad Support for the JetBlue-Spirit Merger:
- The proposed merger between JetBlue and Spirit has garnered widespread support, not only from major labor groups but also from the business community.
- JetBlue’s pilots’ union and the unions representing both JetBlue and Spirit’s flight attendants are in favor of the merger, believing it will positively impact and expand opportunities for current and future workers.
Benefits for Passengers and Virginia:
- Passengers and businesses in Virginia anticipate benefiting from the merger, expecting reasonable fares and an enhanced flying experience.
- Major labor groups and business communities support the merger, anticipating positive outcomes for the state.
Spirit Airlines’ Perspective:
- Spirit Airlines, facing years of pandemic-induced losses, sees the merger with JetBlue as a strategic move to compete with larger carriers and offset the impact of pandemic-related challenges.
Criticism of Department of Justice (DoJ):
- A former government official has criticized the Department of Justice for opposing the merger, arguing that the collaboration between JetBlue and Spirit would stimulate the airline industry and enhance competition.
- The official also highlighted the potential positive impact on employment, suggesting that the merger could facilitate the transition of thousands of contractors, especially at Spirit Airlines, to full-time positions.
Antitrust Trial and JetBlue’s Position:
- JetBlue is currently facing an antitrust trial with the Department of Justice over its proposed acquisition of Spirit Airlines.
- JetBlue contends that the merger is crucial for its growth and improved competition with larger carriers, aiming to create the fifth-largest airline in the United States.
Anticipated date for the merger?
The trial to determine the fate of the JetBlue-Spirit merger began on October 31, 2023, and is ongoing, with JetBlue working to convince the court of the benefits of the merger and the DoJ arguing against it.
The outcome of the trial will determine the future of the merger.