JetBlue, Spirit deal faces ‘high likelihood’ of US litigation

JetBlue Monday, April 25, 2022 A Spirit Airlines plane lands on the taxiway at Fort Lauderdale Hollywood International Airport.

Joe Cavaretta | Sun Sentinel | Getty Images

JetBlue Airways on Monday said it believed there was a “high probability” the US Justice Department would file an antitrust lawsuit this week to block its $3.8 billion takeover of the low-cost rival. Spirit Airlines.

JetBlue said in a statement that it took the possibility of litigation into account when it proposed a closing date of the deal in the first half of 2024. The extended timeline gives companies time to fight the government in court. The Department of Transportation, which is reviewing the deal, is expected to take parallel action to block the planned transaction, Bloomberg News reported.

Neither the Justice Department nor the Department of Transportation responded to requests for comment.

Shares of JetBlue rose about 1%, while Spirit shares fell about 10% in late trading.

JetBlue won a months-long bidding war for Spirit Airlines after the ultra-low-cost carrier accepted its offer in late July.

JetBlue CEO Robin Hayes said Monday that the government will file a lawsuit to block the deal and that the company will fight it, the Wall Street Journal reported.

“My expectation is that we will be sued by the DOJ this week,” Hayes said. “My understanding is that they came to the table with their own minds.”

The companies proposed selling Spirit’s Boston and New York stakes along with some Florida assets in an effort to ease government antitrust concerns.

JetBlue is also awaiting the outcome of a lawsuit filed by the U.S. Department of Justice asking a court to force JetBlue and American to withdraw from the Northeast alliance. The trial in this case was held last year.

JetBlue’s acquisition of Spirit was expected to face tough antitrust scrutiny from the start, as the four major airlines— American Airlines, United Airlines, Delta Air Lines and Southwest Airlines – Control over 80% of the US domestic market.

JetBlue argued that the merger, which would create the fifth-largest US airline with a 9% market share, would allow it to better compete with its predecessors.

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