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JetBlue-Spirit Deal Challenged by Passengers, Attendants (1)

Nov. 4, 2022, 2:41 PMUpdated: Nov. 4, 2022, 3:36 PM

A group of consumers and flight attendants sued JetBlue Airways Corp. and Spirit Airlines Inc., seeking to halt their planned $3.8 billion merger over concerns that it would eliminate one of the country’s last major discount air carriers.

The antitrust lawsuit, filed late Thusday, seeks an injunction permanently blocking the planned transaction, which would merge Spirit into JetBlue, allegedly giving the combined airline a chokehold over certain routes that neither one currently dominates.

“The nation would not only lose the competition of Spirit, but also the potential competition that JetBlue would provide by building its own national presence the old-fashioned way, by competing for passengers instead of buying them,” the complaint says.

The transaction is also being investigated by the Justice Department, which is reportedly weighing whether to move against the merger.

JetBlue, the sixth-largest US airline, and Spirit, the seventh-largest, didn’t immediately respond to requests for comment Friday.

The suit, filed in the US District Court for the Northern District of California, also seeks to stop a related part of the deal, a side payment of $400 million allegedly given to Spirit’s shareholders as “hush money” so they wouldn’t object. Spirit investors approved the deal in October.

According to the complaint, Spirit’s position as a discount carrier that’s also large enough to compete against the major airlines makes it “unique” in the civil aviation sector.

Merging it into JetBlue would allegedly eliminate not only a significant player in the discount airline market but also a meaningful check on “abuses” by major airlines that have enjoyed an oligopoly since the “furious feeding frenzy of mega-mergers” reduced their number from eight to four.

“Spirit, with its innovative, low-cost service, is an important bulwark against this almost unstoppable trend toward complete concentration and monopoly in the airline industry,” the suit says.

Cause of Action: Section 7 of the Clayton Act.

Relief: A permanent injunction blocking the merger; invalidation of the $400 million payment; costs and fees.

Attorneys: The passengers and flight attendants are represented by Alioto Law Firm and eight other firms.

The case is Garavanian v. JetBlue Airways Corp., N.D. Cal., No. 22-cv-6841, complaint filed 11/3/22.

(Updates with case information and additional reporting throughout.)

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com; Carmen Castro-Pagán at ccastro-pagan@bloomberglaw.com