LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.
Leslie Josephs | CNBC
A federal judge blocked JetBlue Airways' purchase of low-cost rival Spirit Airlines, a major victory for Biden's Justice Department, which sued to stop the merger on grounds that it would drive up prices for some of the most price-sensitive consumers.
JetBlue's planned $3.8 billion purchase of discount retailer Spirit would have created the country's fifth-largest airline. The airlines said a deal would help them grow better and compete against larger rivals such as Delta and United.
The decision, made Tuesday by a federal judge in Boston, represents a victory for a Justice Department that has aggressively sought to block deals it sees as anticompetitive.
“JetBlue’s plan would eliminate the unique competition offered by Spirit – and about half of all seats on ultra-low-cost airlines in the industry – and leave tens of millions of travelers facing higher fares and fewer options,” the Justice Department claimed in its report lawsuit in March.
Spirit shares plunged after the decision was announced, falling 60%, while JetBlue shares fluctuated between gains and losses.
Neither airline immediately commented on the decision.
JetBlue said access to Spirit's similar fleet of Airbus planes would enable rapid growth when planes and pilots are in short supply. The company argues that the growth is necessary to compete with larger airlines. After years of previous consolidation, United, Delta, American and Southwest had control of about three-quarters of the domestic market.
The decision leaves New York-based JetBlue grappling with next steps and tasking new CEO Joanna Geraghty with steering the airline on a new path. Geraghty was announced as CEO Robin Hayes' successor after he announced his resignation earlier this month.
The airline operates in heavily congested airspace in New York and other cities and had planned to use Spirit to gain access to more routes and travelers.
JetBlue planned to redesign Spirit's yellow planes by removing the logo and seats from the tightly packed planes to offer more of a full-service model.
Spirit had grown rapidly in recent years by offering cheap fares and fees on everything from seat assignments to carry-on bags.
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