JetBlue Airways Corp. agreed to transfer some Spirit Airlines Inc. gates and flight slots at three airports to help lessen antitrust concerns over its pending acquisition of the low-cost carrier. Spirit shares jumped after the deal was announced.
(Bloomberg) — JetBlue Airways Corp. agreed to transfer some Spirit Airlines Inc. gates and flight slots at three airports to help lessen antitrust concerns over its pending acquisition of the low-cost carrier. Spirit shares jumped after the deal was announced.
JetBlue will shift all of Spirit’s holdings at Boston Logan International and Newark Liberty International and part of its assets at Fort Lauderdale-Hollywood International in Florida to Allegiant Travel Co., according to a statement Monday. JetBlue previously agreed to divest Spirit’s holdings at New York’s LaGuardia Airport to deep discounter Frontier Group Holdings Inc.
The US Justice Department is trying to break up the JetBlue-Spirit deal on grounds it would give the combined company too much market power in certain areas and lead to higher fares for consumers. A trial is set to begin Oct. 16. JetBlue says the acquisition is necessary for it to compete with larger carriers that control more than 80% of the US commercial airline market.
Spirit rose as much as 15% in New York, its largest intraday gain since May 2022. Allegiant climbed as much as 3.2% and JetBlue was little changed.
Under the agreement, JetBlue will transfer to Allegiant two gates in Boston and two gates in Newark, along with the rights for 43 takeoff and landing slots at Newark. JetBlue also will give up five gates at Fort Lauderdale to the Broward County Aviation Department and will work with the agency on Allegiant’s use of the gates.
Savanthi Syth, an analyst at Raymond James, doesn’t expect the moves will be enough to satisfy the Biden administration’s concerns.
“Given that the administration is just against mergers at all costs, and logic, this is unlikely to placate the DOJ,” she said in an email.
JetBlue declined to comment on terms of the agreements with Allegiant. The company said it still expects to close the Spirit transaction in the first half of 2024.
The divestitures are subject to approval by local airport authorities, the Federal Aviation Administration and the US Transportation Department and will only occur after the JetBlue-Spirit transaction closes. Similar terms govern the Frontier agreement.
(Updates with analyst comment in sixth and seventh paragraphs.)
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