A federal judge on Tuesday blocked the JetBlue Airways Corp. takeover. to acquire Spirit Airlines Inc. for $3.8 billion, agreeing with the Justice Department's assertion that the deal would eliminate an important competitor for price-conscious travelers.
The decision led to the preservation of Spirit shares,
Down 47% in Tuesday's regular session, while JetBlue JBLU shares rose,
rose 5%.
This has also led analysts to speculate about Spirit's near-term health, as well as about a potential domino effect among many carriers of the virus.
“We believe Spirit is likely to look for another buyer (perhaps private equity?) but the most likely scenario is a Chapter 11 filing, followed by liquidation,” Cowen analyst Helen Baker said in a note to clients on Tuesday.
JetBlue and Spirit are unlikely to appeal the decision, a move that could take four to five months, Raymond James analyst Savanthi Seth said on Tuesday. But she said the decision could renew Frontier Airlines' interest in buying Spirit with a lower all-stock offer.
Meanwhile, JetBlue could turn its attention to bidding for Hawaiian Airlines, which Alaska Airlines is already pursuing, according to Seth.
Last week, JetBlue said its CEO, Robin Hayes, who championed the purchase of Spirit, would step down in February and be replaced by company president Joanna Geraghty. Geraghty will be the first woman to lead a major US airline.
Justice Department officials argued that removing Spirit as a competitor would free JetBlue to raise prices by as much as 30%. JetBlue is the country's sixth-largest airline, and Spirit ranks seventh.
During the 17-day trial, antitrust regulators focused on how the deal would affect direct competition between JetBlue and Spirit, impact routes that Spirit flies today but JetBlue does not, and markets that Spirit might enter in the future. .
Consumer advocates praised the decision.
“This is a tremendous victory for travelers, workers and local communities, and another huge victory for antitrust enforcers at the Department of Justice.” William J. said: “For the first time in more than 40 years, a judge has completely blocked an airline merger to protect us all from an even more consolidated industry,” McGee, senior aviation and travel fellow at the American Economic Liberties Project, said in a statement.
