JetBlue Airways stock tumbled to a nearly 12-year low Tuesday as the company forecast a loss for the fourth quarter and heads to court to defend its acquisition of budget carrier Spirit Airlines , a purchase it argues is crucial to its future. Shares were down 15% in early trading Tuesday to roughly $3.55 apiece. Spirit shares were down about 10%, at a more than three-year low. The U.S. Department of Justice sued in March to block JetBlue’s $3.8 billion all-cash purchase of Spirit, a deal the airline reached with the discounter in 2022 after a bidding war with rival Frontier Airlines.
The deal would create the fifth-largest airline in the U.S. JetBlue argued it needs to buy Spirit to grow and better compete with giant carriers — American, Delta, United and Southwest — which control about three-quarters of the U.S. market and are products of megamergers themselves. The Justice Department, however, alleges that “the proposed transaction will increase fares and reduce choice on routes across the country, raising costs for the flying public and harming cost-conscious fliers most acutely.”
The lawsuit is a test for President Joe Biden’s Justice Department, which has aggressively pursued antitrust cases with mixed results in the airline, health-care and publishing industries, among others. The trial starts Tuesday and is set to last about three weeks in U.S. District Court in Boston. The merger would be the first among major U.S. airlines since Alaska and Virgin America combined in 2016.
Maybe Buffet was ahead of his time selling the airlines in 2020.
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