DALLAS — A federal judge on Tuesday sided with the Biden administration and blocked JetBlue Airways from buying Spirit Airlines, saying the $3.8 billion deal would reduce competition.
The Justice Department had sued to block the merger, saying it would drive up fares by eliminating Spirit, the nation’s biggest low-cost airline.
U.S. District Judge William Young, who presided over a non-jury trial last year, said Tuesday that the government had proven that the merger “would substantially lessen competition” and violated a century-old antitrust law.
In his ruling, which ran more than 100 pages, the judge gave a nod to the Justice Department’s argument that Spirit is particularly important to travelers looking for an alternative to pricier airlines.
“Spirit is a small airline. But there are those who love it,” he wrote. “To those dedicated customers of Spirit, this one’s for you.”
Young said that a JetBlue-Spirit combination “would likely place stronger competitive pressure on the larger airlines in the country. At the same time, however, the consumers that rely on Spirit’s unique, low-price model would likely be harmed.”
Shares of Spirit Airlines Inc. plunged 47% after the ruling, while JetBlue shares gained 5%.
JetBlue and Spirit said they disagreed with the ruling and were considering whether to appeal.
New York-based JetBlue had argued that it needs the deal to grow in one move and better compete against bigger rivals that dominate the U.S. air-travel market.
“We continue to believe that our combination is the best opportunity to increase much needed competition and choice by bringing low fares and great service to more customers in more markets,” the airlines said in a statement.
The ruling was a victory for the Biden administration, which has moved aggressively to block consolidation in several industries.
“Capitalism without competition isn’t capitalism — it’s exploitation,” President Joe Biden said on X, formerly known as Twitter. “Today’s ruling is a victory for consumers everywhere who want lower prices and more choices.”
For JetBlue, the ruling was its second major setback in federal court in less than a year. Another judge in the same Boston courthouse killed a partnership in the Northeast between JetBlue and American Airlines.
JetBlue, the nation’s sixth-largest airline by revenue, now must come up with another growth plan. That will be an assignment for incoming CEO Joanna Geraghty. Next month she will replace Robin Hayes, who had engineered both of the deals that have now been blocked in court.