JetBlue Prepares for a Fight With Justice Department if Spirit Merger Blocked
JetBlue Airways CEO Robin Hayes is ready to take the U.S. Department of Justice to court if needed to secure the airline’s proposed merger with Spirit Airlines.
“We’re going to go to court,” he said when asked at an Economic Club of Washington, D.C., event Tuesday what the New York-based carrier would do if the DOJ opposed the $3.8 billion deal.
The DOJ has yet to issue a public decision on the merger. However, multiple reports have indicated that it is preparing to oppose the deal on competition grounds. The regulator has essentially three options: One, let the merger proceed unopposed; two, engage with JetBlue and Spirit to reach a settlement; or, three, oppose the deal and sue to stop it.
In an attempt to avoid a DOJ objection, JetBlue has voluntarily agreed to divest all of Spirit’s assets in Boston and New York, as well as five gates in Fort Lauderdale where the two airlines have large bases. Spirit uses two gates in Boston for up to 16 daily departures, according to Diio by Cirium schedules. It has 16 slot pairs at New York’s LaGuardia airport and operates up to 24 daily departures from Newark Liberty airport. These assets would only be available to other ultra low-cost carriers, for example Allegiant Air, Frontier Airlines, or Sun Country Airlines.
What JetBlue has not offered to divest is its controversial alliance with American Airlines in Boston and New York. The DOJ took the airlines to court last fall over the pact, and the three parties are awaiting a decision by a federal judge. The consensus view among those watching the trial is that a ruling in favor of the airlines is likely.
Hayes and other JetBlue executives have repeatedly said the alliance is not on the table in exchange for its proposed merger with Spirit. However, given the DOJ’s known opposition to the partnership, some say it could prove a critical bargaining chip for JetBlue if the airline wants to get its Spirit merger approved.
The regulator has used partnerships as a merger condition in the past. In 2016, Alaska Airlines agreed to end its codeshare with American in exchange for approval of its merger with Virgin America. Alaska today is the fifth largest U.S. airline with just over a 5 percent share of domestic flyers in the year ending in November, the latest Bureau of Transportation Statistics data via Cirium show.
The combined JetBlue-Spirit would have roughly a 9 percent share of domestic flyers, according to the BTS. That would make it the fifth largest airline in the U.S. behind American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines — collectively known as the Big Four.
JetBlue and Spirit responded to what is known as a “second request” by the DOJ for information on their merger about seven months ago, Hayes said. That is the point at which the antitrust regulator begins its in-depth investigation into the proposed deal.
“We hope to hear soon what’s going to happen next,” Hayes said Tuesday. “Whether we are going to be able to proceed with this regulatory approval, or whether we’re going to get sued and go to court.”
Spirit CEO Ted Christie said earlier in February that they expected to hear from the DOJ in the “next 30 days or so” — or by early March.
The proposed combination appears to have strong grassroots support. More than 6,350 comments in favor of the JetBlue-Spirit merger had been made as of Wednesday on a public U.S. Department of Transportation docket involving the transfer of the latter’s international route authorities. Those in support include Syracuse Mayor Ben Walsh, and many JetBlue and Spirit employees.
JetBlue and Spirit aim to close their merger a year from now, or in the first quarter of 2024. That timeline hinges on the DOJ’s decision.Subscribe Now to Airline Weekly
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