JetBlue CEO "disappointed" but "not surprised" as DOJ aims to block merger with Spirit Airlines
As U.S. authorities responsible for enforcing antitrust laws prepared to take action to block JetBlue's acquisition of Spirit Airlines, JetBlue CEO Robin Hayes said the airline was disappointed but not caught off guard.
"We're disappointed, but we're not surprised," Hayes said Tuesday on "CBS Mornings."
"We said when we got the offer approved by the Spirit shareholders last year that we didn't think we would close 'til the first half of 2024, you know, expecting a trial," he said.
Hayes spoke shortly before the U.S. Department of Justice on Tuesday sued to block JetBlue's proposed $3.8 billion acquisition of Spirit Airlines.
Critics of the merger have argued that removing Spirit from the market would restrict competition in an already consolidated industry.
But Hayes said a big issue is that four major airlines hold 20% of the market share each, while the rest of the airlines, including JetBlue, collectively hold the remaining 20%.
The acquisition, which is valued at $3.8 billion, was announced in July 2022, after JetBlue outbid Frontier Airlines for Spirit. The merger would create the fifth-largest airline in the United States.
Hayes said JetBlue's goal is to broaden its national reach by forming a bigger company with the JetBlue brand, products, employees and fares.
"This is not Pepsi buying Coke," he said. "Together, we are going to be 8-9% of the market ... a distant fifth-largest airline."
Combining JetBlue and Spirit, a discount carrier, would give JetBlue a total of around 460 planes and add more than 1,700 daily flights to more than 125 destinations across 30 countries, the airline said last year.
If the merger goes ahead, Hayes said there will be "more benefit" as new markets and new destinations for travelers are added. He also said fares would drop.
"Every time JetBlue flies on the market, fares go down in that market," he said. "It is actually called the JetBlue Effect."
"Legacy airlines, which fly the most capacity, they will ... bring down their fares to match JetBlue. So, everyone benefits," he said.
"Look, JetBlue and Spirit together will be 8 or 9% percent," he said. "Most people are still going to be flying on the other airlines. That's where you're going to save the really big dollars — by having a bigger JetBlue."
Hayes also announced on "CBS Mornings" that direct flights between New York and Paris will begin on June 29 and can be booked starting Tuesday.
Alain Sherter contributed to this report.