The administration is suing to block JetBlue's proposed $3.8 billion acquisition of Spirit Airlines. The trial in federal district court in Boston could reshape the market for low-cost airlines -- Spirit is by far the nation's biggest budget carrier, and it will disappear if JetBlue wins the case.
JetBlue isn't exactly the sort of behemoth that comes to mind when imagining a defendant in an antitrust case. It is the sixth-largest U.S. airline by revenue, and it is trying to buy the seventh-biggest. If it swallows Spirit, JetBlue will leapfrog Alaska Airlines but still control less than 10% of the U.S. air-travel market. It would remain far smaller than American, United, Delta or Southwest.
"Consumers are better off with an independent Spirit, not a JetBlue intent on removing seats from planes and charging higher fares," government lawyers argued in their pre-trial brief. They say the harm will fall hardest on cost-conscious consumers. JetBlue tried that strategy: It offered to divest gates and landing and takeoff rights and gates in Boston, the New York City area and Fort Lauderdale, Florida, to Frontier and Allegiant. The government scoffed at the offer, saying those discount carriers have pledged to fly the same routes that Spirit flies now.
JetBlue forecast an adjusted loss of 35 cents to 55 cents per share and lower revenue over the last three months of the year. Analysts expected a loss of 15 cents per share, according to a FactSet survey.
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