The JetBlue-Spirit Airlines merger was blocked by a federal judge. Here’s what you need to know

NEW YORK — The prospect of a merger between JetBlue and Spirit Airlines suffered a major blow in court on Tuesday when a federal judge sided with the Biden administration and blocked the $3.8 billion deal.

The judge ruled that JetBlue’s purchase of Spirit, the nation’s largest low-cost carrier, would harm competition — and as a result, raise prices for air travelers. Meanwhile, JetBlue has insisted it needs such a deal to compete with industry rivals.

Here’s an overview of what you need to know.

It comes down to competitive issues. The Justice Department and several attorneys general filed a lawsuit last year to block the merger, arguing that fares would rise if low-cost Spirit were eliminated. U.S. District Judge William Young agreed.

Young, who was nominated to the federal bench by President Ronald Reagan, ruled that the merger would harm competition and violate antitrust law.

“There are no ‘bad guys’ in this case,” the Boston judge wrote. “The two companies are trying – as is expected of them – to maximize shareholder value. The Department of Justice speaks – as the law requires – for consumers who would otherwise have no voice.”

With no merger in sight, the status quo remains for both JetBlue and Spirit — meaning air travelers shouldn’t expect any major changes anytime soon.

But JetBlue and Spirit said they disagreed with the ruling and are considering whether to appeal. JetBlue, the nation’s sixth-largest airline by revenue, argued the deal is needed to better compete with larger rivals.

The ruling could also open the door for Frontier Airlines to make another attempt to buy Florida-based Spirit. The two budget airlines announced a cash-and-stock deal in 2022, but JetBlue made an all-cash offer and won the bidding war.

Tuesday’s ruling was a victory for the Biden administration, which has moved aggressively to block mergers in several industries — including health care, video games and publishing — arguing that such consolidation hurts consumers.

Attorney General Merrick Garland said Tuesday that the Justice Department “will continue to vigorously enforce the nation’s antitrust laws to protect American consumers.”

The administration’s victory could make it more likely that it will challenge Alaska Airlines’ proposal to buy Hawaiian Airlines.

In the past, the Justice Department has faced criticism for greenlighting a wave of mergers. In aviation, previous administrations allowed a series of deals that consolidated the sector to the point where four airlines – American, Delta, United and Southwest – controlled about 80% of the domestic market.

Spirit shares fell 47% on Tuesday. JetBlue shares gained 5%.