Spirit Airlines closed down about 47% on Tuesday after a federal judge blocked its planned $3.8 billion sale to JetBlue Airways (JBLU) on antitrust grounds. JetBlue Airways closed up 5%. William G. Young ruled on Tuesday to permanently ban the planned deal, according to a copy of his ruling.
Judge Young ruled: "In light of the foregoing findings of fact and conclusions of law, the defendant airlines, their agents, servants, employees and all persons acting in concert with any of them are hereby ordered to be permanently prohibited from executing the proposed merger with effect from July 18, 2022."
It is understood that in March last year, the U.S. Department of Justice filed a lawsuit to block the merger of Spirit and JetBlue Airways. In an effort to convince the U.S. Department of Justice, JetBlue announced a divestment plan in September.
Judge Young presides over the U.S. Department of Justice's trial against the two airlines, which began in late October and lasted until the first week of December.
"In summary, if JetBlue were allowed to acquire Spirit - at least as proposed - it would eliminate one of the airline industry's few major competitors that offers unique innovation and price discipline," Young wrote in the ruling. "It would further entrench the oligopoly, immediately doubling the size of JetBlue's stockholders in the industry."
JetBlue and Spirit said in an emailed statement that the airlines are considering their next steps.
The two airlines said in a statement: "We disagree with the U.S. District Court's ruling. We continue to believe that our merger is the best opportunity to add much-needed competition and choice by providing low fares and superior service to more customers in more markets, while strengthening our ability to compete with the major U.S. airlines. JetBlue terminated the Northeast Alliance and committed to significant divestitures, eliminating any legitimate anti-competitive concerns raised by the U.S. Department of Justice. As part of the legal process, we are reviewing the court's ruling and evaluating our next steps."
JetBlue said in September that it would transfer all Spirit shares in Boston and Newark airports to Allegiant Travel (ALGT), as well as five gates and ground facilities at Fort Lauderdale airport in an effort to appease antitrust regulators. In June, JetBlue announced it would divest all of Spirit's stake in New York's LaGuardia Airport.
The Spirit/JetBlue deal is set to expire on January 28, but will be automatically extended by six months to July 24.
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