JetBlue Airways is ready to give up Spirit’s position in New York City for the big one Acquisition of 3.8 billion USD approved.
The New York-based carrier announced on Thursday that it has reached an agreement with Frontier to divest all of Spirit’s stake in New York’s LaGuardia Airport (LGA) as part of its proposal. JetBlue to acquire Spirit.
Upon successful closing of the deal, JetBlue will offer six ports and 22 locations – basically right to take off and land — to Frontier, the company will be able to use them to enhance ultra-low-cost service out of the New York City airport that many consider the most convenient in the area.
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This divestment is part of JetBlue’s upfront commitments included in the merger agreement and is contingent on the successful completion of the transaction, which JetBlue expects to take place in the first half of the year. 2024.
However, the airline has faced legal obstacles from the Department of Justice, which sued to prevent the merger this early year.
The case is still awaiting a court date, but JetBlue’s legal team seems willing to sit down and make some concessions to get the merger approved.
Department of Justice trust that a merger between JetBlue and Spirit will eventually cause airfares to go up because a combined airline will eliminate an important budget carrier and will result in fewer total seats for sale.
This position contrasts with previous precedent in which the government has approved mergers such as American-US Airways, United-Continental, Delta-Northwest and Southwest-AirTran.
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If approved, the merger would create the fifth largest airline in the United States, and JetBlue plans to acquire all of Spirit’s assets and bring the airline fully into its current operations.
JetBlue argues it needs a merger to better compete with the nation’s four major airlines, including American, Delta, Southwest and United, which together account for about 80 percent of the country’s airline market.
JetBlue has been trying to win support for the merger from local governments and elected officials, including Florida Attorney General Ashley Moody, who worked with JetBlue to secure at least 2,000 new jobs in the country. Florida due to the proposed merger.
Meanwhile in New York – perhaps the most capacity-restricted airspace in the country – JetBlue is poised to maintain the same level of competition at extremely low costs by providing Frontier with all ports and locations. by Spirit.
“We are committed to ensuring that our combination with Spirit maintains ultra-low-cost airline access in New York. “We are pleased that this agreement with Frontier will maintain the same level of ultra-low-cost transit service at LaGuardia Airport,” Robin Hayes, chief executive officer of JetBlue, said in a statement.
While JetBlue is poised to move forward with its takeover of Spirit, the airline has recently hit a legal hurdle in its other sector. High-level lawsuit with the Ministry of Justice.
That decision was made on May 19, and it blocked JetBlue’s Northeast Alliance with American Airlines. Judge Leo T. Sorokin argued that the treaty “dramatically reduces competition in the domestic market for air travel.”
The two carriers have 30 days to end their union, pending a possible appeal or extension.
American CEO Robert Isom indicated on Wednesday that the airline would appeal the DOJ’s ruling, but interestingly, JetBlue declined to comment and said it continues to evaluate its options for Union North East Alliance.
