The Future of JetBlue: Is the Airline in Serious Trouble?

With an antitrust lawsuit and worse Q3 & Q4 than anticipated, JetBlue has seen some better days, but will this be the end of JetBlue?

JetBlue has recently announced a buyout with Spirit Airlines worth around $3.8 billion, yes, that's right, a Billion with a B. Many argue that the airline overpays for a sinking airline, as Spirit has not been profitable in three years and holds only 3% of the market. Not only that, but Spirit has been facing more fortunate competition from larger airlines such as United, American, Delta, and Southwest.

The Buyout

JetBlue began its proposed buyout of Spirit Airlines. But the DOJ is not happy. Filling an antitrust lawsuit against JetBlue. The DOJ argues that Spirit Airlines needs to be protected, and if JetBlue is to acquire Spirit, it will allow them to raise fairs by almost 30%, resulting in a $1 billion net loss annually to the consumer.

"JetBlue is counting on the fact that eliminating Spirit and the competition Spirit provides will allow JetBlue to raise fares," Markel said. "That is real harm to real people."

JetBlue argues that the merger will grow its fleet and stack it up against major airlines, resulting in the major airlines lowering their fees due to competing routes. Ryan Shores, JetBlue's attorney, said that the case was a "misguided" challenge to a merger that would result in a combined control of less than 8% of a domestic market. 

They also offered gates and landing and takeoff rights to Frontier and Allegiant. This is what American and U.S. Airlines did back in 2013, but the DOJ rejected the offer, saying the carriers have already committed to fly to the same routes as Spirit currently does. 

JetBlue stocks are at a 12-year low on Tuesday as the company's Q3 & Q4 have seen extensive losses. The company will have to defend its acquisition of the budget carrier in the Boston District Court. If the deal is blocked, the airline could potentially stand to lose $470 million, with a $70 million breakup fee and $400 million to Spirit shareholders.

However, if JetBlue is to win, it will not only become the 5th largest airline in the United States but also make it one of the most significant mergers since 2016.

Previous Runs with the DOJ

This is not the first time JetBlue has encountered the DOJ or its abilities. In 2021, American Airlines and JetBlue had built a partnership in the northeastern U.S., but it ended with a court order from a Federal Judge.

While A.A. recently came out in June saying it would challenge the ruling against the JetBlue partnership, JetBlue has different opinions about the situation, saying that it would not appeal the decision by the Federal court or the DOJ.