JETBLUE MAY END MERGER DEAL WITH SPIRIT AFTER COURT RULING
February 14, 2024
On January 26, 2024, JetBlue filed a notice with the SEC stating it and Spirit may miss deadlines for “certain conditions of closing” that were relevant to the merger agreement between the two airlines. This notice follows the January 16, 2024, decision by a federal judge which blocked the $3.8 billion dollar merger between the two airlines. JetBlue also informed Spirit that “accordingly, the merger agreement may be terminable on and after January 28, 2024” as a result of the order from a governmental entity. Spirit responded to JetBlue’s notice with its own filing, stating that “there is no basis for terminating the merger agreement.” The injunction that blocked the merger was handed down after a month-long trial which featured lawsuits from the U.S. Department of Justice, Massachusetts, New York, California, Maryland, New Jersey, North Carolina, and the District of Colombia. The Court held that the merger would “substantially lessen competition in violation of the Clayton Act and would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.” Importantly, U.S. District Judge William Young reasoned that the merger would further consolidate an airline oligopoly and would likely incentivize JetBlue to abandon its low-cost carrier model once Spirit was eliminated from the marketplace. The merger would have created the fifth-largest U.S. carrier, behind American Airlines, Delta Air Line, United Airlines, and Southwest Airlines. The decision marks a rare victory for the United States Department of Justice (“DOJ”) after several unsuccessful merger challenges in recent months. Antitrust regulators will likely look to Judge Young’s decision when considering whether to challenge Alaska Air’s proposed $1 billion deal to buy Hawaiian Airlines. In light of the Biden administration’s continued scrutiny of mergers, especially those between airlines, the ruling forecasts turbulence ahead for any airline seeking to pursue merger activities.
If you have any questions, please contact Evelyn Sahr at 202.659.6622 or esahr@eckertseamans.com; Drew Derco at 202-659-6665 or dderco@eckertseamans.com; Jay Julien at 202.659.6648 or jjulien@eckertseamans.com, or any other attorney at Eckert Seamans with whom you have been working.
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