JetBlue Airways and Spirit Airlines are seeking an expedited appeal of the recent court ruling that blocked their proposed $3.8 billion merger over antitrust concerns. The airlines argue the judge erred in blocking the deal and want the appellate court to fast-track their appeal with a decision by June.
Background of the Attempted Merger
JetBlue and Spirit announced last July they planned to combine in a cash-and-stock deal that would create the fifth-largest U.S. airline. The merger aimed to allow the two low-cost carriers to better compete against the four dominant U.S. airlines – American, Delta, United and Southwest.
The U.S. Justice Department and attorneys general in six states and the District of Columbia sued to block the deal on antitrust grounds in September. After a six-week trial, U.S. District Judge Leo Sorokin ruled on January 27th that the merger was likely to reduce competition and lead to higher fares. JetBlue CEO Robin Hayes expressed strong disagreement with the ruling.
Airlines Seek Expedited June Ruling from Appeals Court
On January 30, JetBlue and Spirit filed a notice of appeal with the U.S. 1st Circuit Court of Appeals in Boston, seeking an expedited schedule that could allow the appeals court to rule on the case by June.
The airlines argue Judge Sorokin was wrong to conclude the merger would substantially lessen competition or lead to higher fares and reduced service. They cited Spirit’s continued financial struggles as an independent airline to argue the merger is necessary.
Without the merger, JetBlue also faces challenges to continue growing as it has promised Wall Street. The carrier expects to reduce the growth of its flight capacity in 2024 while it focuses on improving profits.
On February 2nd, the 1st Circuit Court of Appeals granted JetBlue and Spirit’s request for an expedited review, setting a briefing schedule that could allow the court to hear oral arguments and rule on the appeal by June 30.
|JetBlue and Spirit file opening appeal brief
|Justice Department files response brief
|JetBlue and Spirit file reply brief
|Oral arguments (tentative)
|By June 30
|Appeals court ruling
Impact if the Merger is Ultimately Blocked
If the appeals court also blocks the merger, the two airlines face significant challenges going forward as independent carriers.
Spirit could have trouble surviving on its own after terminating its merger agreement with Frontier last year and now facing an blocked deal with JetBlue. The ultra-low-cost carrier continues to lose money and has more debt relative to its earnings than any other U.S. airline.
Without Spirit, analysts say JetBlue would likely reduce the growth of its flight network. It would focus on the most profitable routes and trim expenses to improve financial performance rather than expanding across the U.S. to compete with larger rivals.
The Justice Department argues consumers would benefit from the continuation of JetBlue and Spirit as independent low-fare, low-cost carriers putting competitive pressure on bigger airlines. But JetBlue counters it cannot effectively compete long-term on its own.
Ultimately the fate of the merger rests on whether the appeals court sides with the airlines or the Justice Department’s view of the competitive landscape. The expedited schedule will bring urgency to resolving the disputed deal.
What Happens Next with the Appeal
With the expedited briefing schedule now set, both sides will work intensely over the next few months to prepare their arguments before the 1st Circuit Court of Appeals.
JetBlue and Spirit will file their opening appeal brief by March 17 laying out why they believe Judge Sorokin erred in concluding their deal is anti-competitive. The Justice Department will then respond by April 28 defending the judge’s decision to block the airline merger.
Another round of reply briefs will follow from the airlines by May 19. That sets the stage for oral arguments tentatively slated for mid-June.
The three-judge appeals court panel aims to issue their ruling by the end of June on whether to uphold or reject the lower court’s decision prohibiting the JetBlue-Spirit merger.
Both sides recognize time is working against them. The longer the litigation uncertainty drags on, the harder it becomes for JetBlue and Spirit to implement their plans as standalone or combined carriers.
An expedited appeals decision will at least provide definitive guidance to the airlines’ leadership on whether they can finally close their merger or must chart independent paths forward. Stakes are high with jobs, financial returns, and the future competitive landscape of the airline industry all in the balance.
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