[adabyron]

It should be noted that these were 2 small airlines trying to merge together with very little overlap & a willingness to divest more if the Government would work with them. The government refused to talk divestures & it seemed just wanted to block this deal to set a precedence. I do not think they care about Spirit's future or competition here.

Another important item from the trial - only 1/3 of Spirit customers pay the low fee without add-ons. The rest go for something more Jet Blue like anyways.

The precedence that the judge set here is more important than the actual merger. If any tiny subset of customers are harmed the deal cannot go through. I was really surprised to see this from a judge appointed by President Reagan. This could really crush M&As in America.

[rising-sky]

> Rivals on average cut prices 7% to 11% when Spirit enters a market[1][2].

The same cannot be said for JetBlue

> “If JetBlue were permitted to gobble up Spirit — at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,” Young wrote. “… Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.”[2]

> This could really crush M&As in America.

That's a bit hyperbolic. If it does crush anti-competitive / anti-trust mergers, that's a win in any capitalist's book

[1] https://money.usnews.com/investing/news/articles/2024-01-16/... [2] https://www.washingtonpost.com/transportation/2024/01/16/jet...

[adabyron]

On the first 2 arguments - Spirit was able to be successful for a few years. That's no longer the case. They're not profitable. I believe this was stated by multiple airline CEO's publicly.

> That's a bit hyperbolic. If it does crush anti-competitive / anti-trust mergers, that's a win in any capitalist's book

The judge literally ruled here that a very small market (1/3 of customers on a small airline) would be harmed. JetBlue was also willing to discuss divestures & the government refused because they didn't care about competition or working with JetBlue. They have been doing weak cases for the past few years in hope to get any precedence set that makes M&A harder.

The judge uses the DOJ's expert witness's findings even after agreeing with JetBlue's team that the witness's model was completely broken.

This was a pro-competitive merger in my opinion because it created a stronger rival for the big 4, albeit still roughly half the size of most of them.

[rising-sky]

If the argument is 1/3 vs 2/3, seems pretty clear where the ruling would fall if those are the two options.

> ...the government refused because they didn't care about competition or working with JetBlue.

I take it this is your opinion based on your perception?

However from the U.S.News link I posted above

"The judge, who had questioned whether further asset divestitures could make the deal work, said, "The courthouse doors remain open, should the defendant airlines decide to try again."

You can also read the actual ruling [1] which states:

> _"Throughout June 2022, JetBlue made a series of revised offers to acquire Spirit, with increases in per-share price, increases in the reverse termination fee, and commitments to divestitures. Spirit continued to resist, citing continued concerns about the anticompetitive nature of such an acquisition. On June 6, 2022, Mr. Christie received an email from Mr. Hayes with an attached new, revised offer for Spirit Airlines. On June 27, 2022, JetBlue made a further amended offer to purchase Spirit; the Spirit Board did not view this amended offer as better and did not accept it. Instead, Spirit issued another press release on June 28, 2022, reaffirming its commitment to the transaction with Frontier and noting that the “[l]atest offer from JetBlue does nothing to address our Board’s serious concerns that a combination with [JetBlue] would not receive regulatory approval.”_

So even the Spirit board did not prefer this acquisition, even with the divestitures, but acquiesced to expected shareholder concerns on value maximization

[1]https://s3.documentcloud.org/documents/24362262/jetblue.pdf

[adabyron]

The judge asked the DOJ if there were any divestures that could be made that would make them think this deal should go through. They said no. I believe this was in the closing statements. JetBlue also tried to work with the DOJ before the trial & had no luck. JetBlue did divestures without anyone's requests to win over Spirit agreeing to this. The DOJ was never interested in them though.

In the end, Spirit should have stayed with their Frontier merger though the DOJ probably would have tried to block that as well.

Today Spirit is saying they will be looking at restructuring. Every analyst seems to be saying they are going to declare bankruptcy.

I have no idea how the DOJ or the Judge sees this as increasing competition, which I'm all for by the way. Even if Spirit doesn't go bankrupt they cannot compete as a low fare provider anymore. They will just slowly bleed for the next several years as they sell off and are unable to grow. Same with JetBlue now as well.

[volkl48]

They are the 6th and 7th largest airlines in the country. They are small only relative to the 4 largest.

The best argument I see for allowing the merger is that Spirit has been consistently losing money since the pandemic and may no longer have a viable business model. If they're destined for shutting down in the long run anyway, then you may as well let them attempt to merge, that'll probably lead to less of their market share winding up with the 4 biggest than them simply closing up shop will.

[nashashmi]

> The Justice Department argued that smaller, low-cost airlines like Spirit helped reduce fares and that allowing the company to be acquired by JetBlue, which tends to charge higher prices than Spirit, would have hurt consumers.

In the new era, practices, perceptions and mission statements have to also be up to a standard, not just statistics. I wonder how long this could go on for.

[toyg]

> I was really surprised to see this from a judge appointed by President Reagan

Really? How old is he, 80? Why do Americans insist in having such geriatric leaders, they're starting to make Iran look normal...