JetBlue, Spirit Airlines Drop Proposed $3.8B Merger

( – A court has blocked a merger plan that would have combined JetBlue and Spirit Airlines in a $3.8 billion deal. JetBlue representatives said the two companies still believe their merger would be beneficial, but agreed to drop the idea following a lawsuit by the Justice Department that said the deal would reduce competition and drive up passenger prices.

A Boston judge has now ruled in the government’s favor and determined that the planned merger violated antitrust laws. The companies planned to appeal, and a hearing was scheduled for June, but executives have since dropped the appeal and accepted the decision.

In an internal email to staff, JetBlue’s CEO, Joanna Geraghty, said, “The probability of getting the green light to move forward with the merger anytime soon is extremely low.” She added that even if June’s appeal were successful, “we simply don’t see a path to regulatory approval.”

The low-fares airline Spirit is now predicted to face a difficult future as its share price fell 14% in early March, and it struggles with low demand. Some analysts suggest the company may even face bankruptcy, which would have a significant impact on the small airports it serves.

Arnold Palmer Regional Airport (LBE), for example, could face closure if Spirit goes out of business, because it is the only airline that flies in and out of the small facility located an hour from Pittsburgh.

Gabe Monzo, executive director of the airport, said it would be “devastating” if Spirit goes “belly up.”

The airline is a favorite for people seeking rock-bottom fares and is popular with college students and others without large amounts of cash to spare. Florida Gulf Coast University management professor Jase Ramsey said a closure would also have a negative impact on family vacations to the Sunshine State and will raise prices for travelers arriving from northern states. “This isn’t good for us. South Florida really depends on them,” he said.

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