DOJ to file suit blocking JetBlue’s takeover of Spirit

The Justice Department is expected to file suit as soon as Tuesday to block JetBlue’s pending $3.8 billion takeover of Spirit Airlines, arguing the deal would eliminate a critical low-cost carrier and raise prices in an already heavily-consolidated industry, according to two people with direct knowledge of the matter.

The lawsuit is the latest anti-monopoly move by the Biden administration, which has also shown increasing interest in policing air travel. The lawsuit's likely Tuesday timing was first reported by Bloomberg.

Spokespeople for DOJ, Spirit could not immediately be reached for comment. A JetBlue spokesperson said they believe there is a "high likelihood" of a suit "this week."

The lawsuit, which has been looming over the pending merger for months, could delay the deal by well over a year. The companies have until early next year to close the deal, which is aimed at creating the nation’s fifth-largest airline in an industry dominated by Delta, American, Southwest and United.

In an interview with POLITICO in late February, JetBlue CEO Robin Hayes and Spirit CEO Ted Christie both argued that the deal would mean lower prices for people who want to fly. But the Justice Department, which has been investigating the proposed merger since summer, was unconvinced that removing ultra-low-cost carrier Spirit from the market would not cause fares to rise.

When asked for details about how the merger could drive down prices, Hayes said fares are a “function of capacity” and that Spirit flights would adopt JetBlue’s seat configuration. Though that means fewer seats, he argued that customers would still save because planes in the new, combined airline would spend more time in the air and less time on the ground.

The suit comes at a time of immense upheaval for the airline industry, including the December debacle in which Southwest Airlines canceled more than 16,000 flights during the Christmas holidays. That episode helped stoke anger from consumers and regulators, amid complaints that decades of mergers have left passengers at the mercy of a monolithic airline industry.

Federal antitrust regulators have taken a harder line against a range of powerful businesses under President Joe Biden, including a recent DOJ lawsuit aimed at breaking up Google’s advertising business and the Federal Trade Commission’s unsuccessful attempt to stop Facebook’s parent from buying a fitness app.

JetBlue’s and Spirit’s argument before DOJ is essentially that they must merge in order to compete with the big four legacy airlines.

To address DOJ’s concerns, JetBlue has offered to sell off the entirety of Spirit’s operations at Newark Liberty International Airport in New Jersey, New York’s LaGuardia Airport and Boston Logan International Airport in Massachusetts, as well as five slots at Fort Lauderdale-Hollywood International Airport in Florida.

Not on the table was an offer to abandon JetBlue’s Northeast Alliance with American Airlines, which the DOJ challenged in court last year and is awaiting a ruling from a federal judge in Boston.

Now JetBlue has a second DOJ antitrust case to contend with.