US judge blocks JetBlue-Spirit airline merger

A US federal judge on Tuesday ruled against JetBlue's $3.8 billion takeover of low-cost carrier Spirit Airlines, saying that the deal would reduce competition.

The decision comes after the US Justice Department last year sued to block the merger, noting the combination would hurt consumers and violate antitrust law.

Spirit Airlines shares plunged 50.1 percent following the announcement, while JetBlue rose 5.0 percent.

Both companies pushed back against the decision in a joint statement, saying they disagreed with the ruling by District Court Judge William Young in Boston.

"We are reviewing the court's decision and are evaluating our next steps as part of the legal process," they said.

JetBlue and Spirit previously defended the tie-up, saying they would continue pushing to extend the "JetBlue Effect," which has historically pressured bigger airlines to set more affordable fares.

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On Tuesday, the airlines added that their combination would benefit customers and boost their ability to compete with dominant US carriers.

But in his decision, Young said: "JetBlue plans to convert Spirit's planes to the JetBlue layout and charge JetBlue's higher average fares to its customers."

"The elimination of Spirit would harm cost-conscious travelers who rely on Spirit's low fares," the judge added.

Young noted that the airline industry has become more concentrated due to mergers.

"The proposed acquisition, in this Court's attempt to predict the future in murky times, does violence to the core principle of antitrust law: to protect the United States' markets -- and its market participants -- from anticompetitive harm," he said.

Last year, Attorney General Merrick Garland told a press conference that the merger would "limit choices and drive up ticket prices for passengers across the country."

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He added that the agreement "will be particularly harmful for travelers who rely on what are known as ultra-low-cost carriers in order to fly."

Last year, JetBlue also said it would wind down an alliance with American Airlines rather than challenge a US court ruling that determined the joint venture was anti-competitive.

Source: AFP