A federal court has blocked the merger of JetBlue and Spirit Airlines, according to U.S. District Court documents released Tuesday.

If combined, JetBlue, which is currently the nation’s sixth largest airline, and Spirit, which ranks seventh, would have become the fifth largest domestic air carrier, accounting for 10.2% of the market.

What You Need To Know

  • A U.S District Court in Boston has blocked the merger of JetBlue and Spirit Airlines

  • JetBlue planned to buy Spirit Airlines for $3.8 billion in July 2022

  • If combined, the two airlines would have become the nation's fifth largest domestic carrier

  • The court said the merger would substantially lessen competition

The ruling in a U.S. District Court in Boston is the result of JetBlue Airways Corp.’s $3.8 billion merger agreement with Spirit Airlines executed in July 2022. As a result of the deal, all of Spirit’s assets were to be transferred to JetBlue, removing Spirit from the marketplace.

The U.S. Department of Justice, along with the states of California, Maryland, New Jersey, New York and North Carolina, contested the deal, saying the merger violated the nation’s antitrust laws. On Tuesday, the court enjoined the merger, saying it “would substantially lessen competition.”

"Spirit is a small airline. But there are those who love it," U.S. District Judge William Young, an appointee of Ronald Reagan, wrote in his ruling. "To those dedicated customers of Spirit, this one’s for you."

In its ruling, the court said the airline industry has become more concentrated because of a series of mergers over the past couple decades that has left just a handful of carriers controlling the market. While JetBlue and Spirit are not large airlines on their own, combining them would make them a larger player and could disincentivize JetBlue from continuing to offer low-cost flights.

The two low-cost airlines defended their merger plan by saying they were not able to grow fast enough because, in part, there are too few new aircraft to purchase. But the court, while acknowledging the airline industry is “a fast-moving enterprise” with economic conditions that are almost impossible to predict, said federal antitrust law is designed to protect the market, and its participants, from anticompetitive harm.

The ruling found that Spirit and JetBlue, operating as independent airlines, help keep consumer prices low because they are head-to-head competitors. If Spirit is removed from the marketplace, it “would be exceedingly difficult for another airline, or a combination of other airlines, to replicate.”