A federal judge has blocked JetBlue Airways' bid to acquire Spirit Airlines, which is currently facing challenging circumstances. The proposed merger, valued at $3.8 billion, was deemed detrimental to competition within the aviation industry by the US Department of Justice.
According to a news release by Reuters.com, the judge declared that the acquisition attempt was anticompetitive and would negatively impact customers. Following the announcement of the merger attempt, both the Justice Department and state attorney generals from six states initiated a lawsuit to counteract it. The Justice Department estimated that this merger would result in an annual net harm of $1 billion to consumers. In response to this ruling, JetBlue announced its intention to challenge it by appealing to the 1st U.S. Circuit Court of Appeals. At present, these airlines rank as the sixth and seventh largest U.S. airlines respectively. Since the court's decision, Spirit airline shares have plummeted over 50%, although they managed to recover by 12% following news of the planned appeal.
In a report by The Guardian, representatives from JetBlue and Spirit stated: "We disagree with the US District Court’s ruling. We continue to believe that our combination is the best opportunity to increase much needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant US carriers."
JetBlue also announced plans for strategic adjustments aimed at boosting company profitability. As reported by CNBC, these changes include discontinuing flights from John F. Kennedy Airport to Portland, Oregon, and San Jose, California, as well as from Westchester, New York, to Martha's Vineyard. The airline intends to add service routes towards Caribbean destinations and Paris in an effort to expand their leisure routes. "We can’t fly everywhere we’d like, so we need to be highly selective about where we point our aircraft in order to turn a profit, support our overall network strategy, and offer a reliable operation," said Dave Jehn, the vice president of network planning and airline partnerships.
