The closing arguments have been heard in a United States Department of Justice trial to decide on the fate of the planned USD3.8 billion acquisition of Spirit Airlines (NK, Fort Lauderdale International) by JetBlue Airways (B6, New York JFK), with US District Judge William Young hinting that the deal could go ahead if JetBlue agrees to forfeit more assets.
Leaving it open which way he would lean in the non-jury trial in Boston, the judge summarised that the Justice Department’s request to block the deal was hard to agree with in a “dynamic industry facing unique opportunities and challenges in the post-Covid environment.” Yet he said it was inevitable that fares would rise if the two low-cost carriers merged.
JetBlue has already offered to divest gates and slots at Boston, New York Newark, and Fort Lauderdale International to quell antitrust concerns, but Young suggested that further divestitures could be enough to push the deal over the line.
The Justice Department, six US states, and the District of Columbia sued to challenge the merger in March as being harmful to competition. The start of the trial was delayed but it began on October 31, and lawyers for both sides delivered their closing arguments on December 5.
Young had “seen cases where a court has decided the divestitures were close but not sufficient and then has proceeded to say this would pass muster if there were this divestiture or that divestiture,” he said, as quoted by Reuters. However, an attorney for the Justice Department responded that the merger is so anti-competitive that nothing short of a full injunction against it would suffice.
A lawyer for JetBlue, Ryan Shores, admitted that it was within Young's power to craft such an order but urged that any remedies the court imposes should be narrow.
He stressed that JetBlue needed Spirit in order to be a “viable challenger” to the four airlines that control 80% of the domestic air travel market, namely American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. “That mandate is even more urgent today,” he added, as quoted by the Associated Press news agency.
Asked how long it would take for consumers to see the benefits JetBlue promises, such as more competition with bigger airlines, Shores replied that it could be two or three years, “after the market has arrived at its post-merger competitive equilibrium.”
