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Spirit Airlines shareholders approve $3.8B merger with JetBlue

Spirit Airlines shareholders voted Wednesday to simply accept a $3.8 billion buyout from JetBlue Airways, however the deal might nonetheless face a problem from federal antitrust regulators.

JetBlue emerged because the winner in a bidding battle with Frontier to amass Spirit, the nation’s largest price range airline.

Spirit introduced the end result after a quick meeting, which was held on-line. Spirit stated solely that the JetBlue deal was supported by a majority of shares voted; it promised an actual rely inside 4 business days.

Wall Street extensively anticipated shareholders to approve the sale after they pressured Spirit to drop a proposed merger with Frontier Airlines in favor of JetBlue’s richer, all-cash provide.

“This is an important step forward on our path to closing a combination that will create the most compelling national low-fare challenger to the dominant US carriers,” Spirit CEO Ted Christie stated after the vote.

JetBlue issued a press release calling the vote “a major milestone in our plan to join with Spirit to create a high-quality, low-fare national challenger to the Big Four airlines” — a reference to American, United, Delta and Southwest. JetBlue vowed to work by way of the regulatory course of.

JetBlue is predicted to repaint Spirit planes and fold its pilots and different staff into the JetBlue workforce. The deal would make New York-based JetBlue the nation’s fifth-biggest airline with greater than 450 planes and about 7,000 pilots and — it hopes — assist it win prospects from the larger airways.

However it might additionally get rid of Spirit, the nation’s largest price range provider, and that may not sit effectively with regulators, who seem to oppose any additional consolidation within the airline trade after a spherical of mergers between 2005 and 2016.

The Justice Department is at present preventing to kill a partnership in New York and Boston between JetBlue and American, which the airways name the Northeast alliance or NEA. Department attorneys say the alliance is anti-competitive and can drive up costs for shoppers. A trial that started final month in federal court docket in Boston resumes Monday.

The final result of the NEA trial might have a big impact on whether or not the Justice Department lets JetBlue purchase Spirit or sues to dam the sale, in keeping with Florian Ederer, an antitrust knowledgeable and economics professor at Yale University.

American Airlines plane
The Justice Department is at present preventing to kill a partnership in New York and Boston between JetBlue and American, which the airways name the Northeast alliance.
REUTERS

“If (JetBlue and American) win the case, and the judge thinks the NEA does not harm consumers enough, it’s almost guaranteed that there will be an antitrust challenge to the Spirit acquisition,” Ederer stated.

JetBlue argues the alliance with American ought to be allowed as a result of it’s not a merger. The acquisition of Spirit, nevertheless, would merge two airways.

JetBlue CEO Robin Hayes has stated he’s assured of profitable regulatory approval to purchase Spirit. The airways hope to shut the sale within the first half of 2024.

Spirit and Frontier introduced their deliberate merger in February. Both are so-called ultra-low-cost carriers that cost decrease fares than different airways however tack on extra charges to make up a few of the distinction.

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