A JetBlue Airways Airbus A320, left, passes a Spirit Airlines Airbus A320 as it taxis on the runway, Thursday, July 7, 2022, at the Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Fla.
Wilfredo Lee | AP
The Justice Department on Tuesday sued to block JetBlue Airways‘ $3.8 billion proposed takeover of budget carrier Spirit Airlines, the Biden administration’s latest attempt to prevent industry consolidation.
Spirit Airlines agreed to sell itself to JetBlue last summer after a long battle for the carrier between JetBlue and Frontier Airlines. New York-based JetBlue’s acquisition of Spirit faced a high hurdle with regulators from the start, and the airline on Monday said it expected “a high likelihood of a complaint from DOJ this week.”
JetBlue’s takeover of Spirit would create the fifth-largest airline in the country and also eliminate Spirit.
The Florida-based budget airline has a business model that rests on offering rock-bottom fares and fees for everything from carry-on baggage to seat assignments. JetBlue has argued the combination would allow it to better compete with large airlines that dominate the U.S. market. The deal would also give JetBlue access to more Airbus jetliners and pilots, which are both in short supply as travel demand remains strong.
JetBlue plans to remodel Spirit’s bright-yellow planes with packed-in seats to JetBlue’s, which include seat-back screens and more legroom.
A JetBlue-Spirit combination would be the first major U.S. airline merger since Alaska Airlines’ takeover of Virgin America in 2016. The Justice Department at the time required Alaska to scale back its code share with American Airlines to clear the deal.
The Justice Department also sued to block American Airlines’ 2013 merger with US Airways but settled, forcing American to sell dozens of gates and slots at congested airports like Washington Reagan National Airport.
The Biden administration has vowed a hard line against deals it considers to be anti-competitive and has sued to block other mergers, such as Penguin Random House’s failed attempt to buy rival publisher Simon & Schuster. Yet the administration has failed to stop several deals, such as one last year in the sugar industry and UnitedHealth’s merger with Change Healthcare.
The administration has also taken aim at the airline industry after a host of travel disruptions over the past two years, even after carriers received $54 billion in payroll aid to weather the Covid pandemic.
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