JetBlue Airways Says 'Spirit Deal Is Solution To Lack Of Competition,' Contests Regulatory Overhang

  • The Department of Transportation and Department of Justice are reportedly looking to block the prospective merger between JetBlue Airways Corporation JBLU and Spirit Airlines Incorporated SAVE on the grounds that the merger would be anti-competitive. 
  • Robin Hayes, CEO of JetBlue, said the U.S. government's antitrust regulators had seemed intent on stopping the merger from the outset.
  • The airlines have argued that merging will increase, rather than undermine, competition.
  • "My sense is they came to the table with their minds made up," Mr. Hayes said in a Wall Street Journal report. He said JetBlue was prepared to contest a Justice Department lawsuit in court.
  • In July last year, JetBlue Airways agreed to acquire Spirit Airlines for $33.50 per share in cash, implying an equity value of approximately $3.8 billion and an adjusted enterprise value of $7.6 billion.
  • JetBlue released updated data to support further the airline's role among the dominant, higher-price legacy carriers and the pro-competitive impact of the merger with Spirit on the industry.
  • The data showed that JetBlue is over three times more effective at lowering legacy fares than Spirit.
  • JetBlue and Spirit have little overlap, and the combination will increase competition.
  • The Big Four airlines, including American Airlines Group Inc AALUnited Airlines Holdings Inc UALDelta Air Lines Inc DAL, and Southwest Airlines Co LUV, lock on about 80% of the market.
  • Combined, JetBlue and Spirit will have only about 9% market share, compared to about 16-24% for each of the four largest airlines. The added scale and ability to grow further will result in meaningful competition.
  • Price Action: SAVE shares are up 2.51% at $16.77, and JBLU shares are up 0.71% at $8.46 during the premarket session on the last check Tuesday.
Market News and Data brought to you by Benzinga APIs
Posted In: Large CapM&ANewsSmall CapLegalGeneralAirlinesBriefsIndustrials
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!