JetBlue, Spirit Merger Collapse’s Potential Economic Effects in US

JetBlue Airways Corporation and Spirit Airlines' merger deal has collapsed after a federal judge blocked their $3.8 billion acquisition agreement. In explaining the reason for the rejection of the deal, the court said the merger of the two airlines violates antitrust law and poses potential harm to the consumers.

As per BNN Breaking, the U.S. Justice Department filed a lawsuit against the merger, stating that the consumers or travelers would be forced to pay higher fares once Spirit Airlines is removed as a competitor. In any case, the court decision has left JetBlue Airways, Spirit Airlines, and their respective shareholders uncertain.

Impact on the Stock Market

The reports of JetBlue and Spirit's collapsed deal have already shown a considerable effect on the stock market. Firstly, the latter's shares are rising and falling while the former's shares are sinking in the extended trading.

The court's decision to block the merger also raises concerns for stockholders, including airports that depend on Spirit Airlines, like the Arnold Palmer Regional Airport (LBE). The Pennsylvania-based airport primarily relies on the said airline as the only commercial airline in the region, contributing over $100 million to the state.

Spirit Airlines' Unknown Future May Increase Travel Costs Across the US

With the blocked acquisition, the future of Spirit Airlines is now in the balance. It is now facing a possible bankruptcy, so it will try to file an appeal to reverse the ruling. The company still has a few months to change the court's decision as the contract for the acquisition does not expire until July.

CNBC reported that Management Professor Jase Ramsey of the Florida Gulf Coast University said that the possible pullout of Spirit's operations, if the JetBlue acquisition failed, will lead to higher prices for tourists and frequent flyers such as college students, missionaries, businessmen, and others.

"This will be bad for our region if something happens to Spirit from a price perspective," the professor commented. "They are usually our low-cost leader. If you want to do a family vacation out of here, that is your go-to airline. This is not good for us as South Florida really depends on them. It is a healthy market with two low-cost providers that compete with one another."

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