JetBlue Air braces for antitrust decision of DOJ on Spirit merger

Bloomberg

JetBlue Airways Corp is preparing for a possible lawsuit from the US Justice Department seeking to block the carrier’s merger with Spirit Airlines Inc.
While antitrust authorities haven’t yet revealed whether they plan to take action to prevent the deal, JetBlue Chief Executive Officer Robin Hayes said the company’s legal team is ready to fight back if necessary. A decision is expected to come in the next few weeks.
“We’ve definitely been preparing” for outcomes that could include opposition from the DOJ, Hayes said in an interview at Bloomberg’s New York headquarters. The carrier has in-house lawyers and is working with outside counsel as well. “We believe we have a very strong case.”
JetBlue is counting on the combination to provide an influx of aircraft and pilots, both currently in short supply, and to expand its network. The deal would make it the fifth-largest US carrier based on domestic passenger traffic. The airline hopes to lure passengers away from larger competitors with lower fares and better onboard service.
JetBlue and Spirit are facing a higher hurdle than past industry mergers given the anti-consolidation stance taken by the Biden administration. They’ll need to convince the Justice Department that the combined airline won’t have enough market concentration in some cities to give it an unfair pricing and competitive advantage.
Hayes said he wouldn’t change the timing outlook given by Spirit CEO Ted Christie, who said that a ruling was likely “in the next 30 days or so.” JetBlue is planning for regulatory approval by early next year, a timeline that Hayes said would account for six months of court proceedings and another three for a decision in a possible DOJ suit.
“You either accept a world where you have four large airlines who will call the shots with about 20% of the market each, and the rest of us have 20% between us,” Hayes said of the decision facing the DOJ.
“Or you can create a true low-fair, high-quality national challenger to take on these guys.”
JetBlue already has offered to shed Spirit assets in Boston, New York and some parts of Florida to help secure federal support.
The company also is awaiting a judge’s ruling on a separate antitrust challenge to its alliance in the northeast US with American Airlines Group Inc from the US and attorneys general in six states and the District of Columbia.
Hayes has pledged to convert Spirit’s ultra-discount business model to JetBlue’s, which features low fares and customer-friendly service like free Wi-Fi and live television.
While JetBlue awaits verdicts on its pending partnerships, the carrier is capitalising on a broad rebound in demand.