Spirit Airlines shares plunge after judge blocks JetBlue merger

Spirit Airlines shares plunge after judge blocks JetBlue merger

Jan 16,2024
New York CNN  — 

Spirit Airlines shares tanked 56% on Tuesday after a federal judge in Boston ruled against JetBlue’s proposed $3.8 billion acquisition of the discount airline.

“In light of the foregoing Findings of Fact and Conclusions of Law, it is hereby ordered that the Defendant Airlines, their agents, servants, employees, and all persons acting in concert with either of them, are permanently enjoined from executing the proposed merger as agreed on July 28, 2022,” wrote Judge William Young on Tuesday.

The ruling outlined several concerns, including increased fares for flyers, particularly for discount airlines Spirit’s customers and significant debt for JetBlue (JBLU).

CNN has reached out to JetBlue and Spirit for comment.

The US Justice Department sued in March to halt the deal, marking the first time in more than 20 years that the government has sought to block a US airline merger.

The Biden administration has argued since taking office there needs to be greater competition between businesses, especially in the airline industry, to lower costs for consumers. Spirit (SAVE), with its low base fare business model that charges customers extra for everything, including carry-on bags, prompts larger carriers to offer a percentage of their seats at the lowest possible price.

“If not blocked, the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers across the country. The Justice Department is suing to prevent that from happening,” said Attorney General Merrick Garland in March. “Companies in every industry should understand by now that this Justice Department will not hesitate to enforce antitrust laws and protect American consumers.”

JetBlue argued that the deal would create a new, stronger competitor to those four larger airlines and work to bring down fares, not increase them.

This story is developing and will be updated.

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