JetBlue merger blocked by judge, Spirit Airlines stock plummets

JetBlue’s acquisition of low-cost rival Spirit Airlines remains on the runway. Court ruling blocking merger Tuesday (January 16th).

And that caused Spirit’s stock price to plummet.

Spirit and JetBlue said the proposed $3.8 billion partnership would create a serious competitor to the four largest U.S. airlines and lead to lower fares. But U.S. District Judge William Young disagreed in his ruling, arguing that the deal would actually stifle competition and drive up prices for consumers who can least afford it.

This decision sent Spirit’s stock price into a downward spiral. The company’s stock lost more than 50% of its value before recovering 3%. Shares fell 47% on the day, ending at $7.92. JetBlue shares rose nearly 5% to close at $5.13.

The ruling comes after the Justice Department filed a lawsuit last March seeking to halt the merger, as part of a bid by the Biden administration to halt the deal, which it deems anticompetitive.

“JetBlue’s plan eliminates the unique competition offered by Spirit, eliminates about half of the industry’s ultra-low-cost airline seats, and leaves tens of millions of travelers facing higher fares and fewer choices.” I will.” The Department of Justice claimed at that time.

Spirit is being disputed for about $500 million.

Spirit and JetBlue, which have set out to become the fifth-largest U.S. airline in 2022, both disagreed with the ruling and said they were considering their future actions. If the deal falls through, Spirit would pay JetBlue $70 million and shareholders $400 million.

Spirit and JetBlue’s latest setbacks could affect other proposals aviation industry merger. One potential casualty is Alaska Airlines. Plan to buy Hawaiian Airlines for $1.9 billionclosing could become even more difficult after federal authorities’ victory in court.