JetBlue-Spirit merger trial tests US airline deal crackdown

The US crackdown on airline consolidation faces a new test this week with the trial of a government lawsuit claiming the $3.8b takeover of Spirit Airlines by JetBlue Airways would reduce competition and boost fares for passengers. While investors consider approval of the deal to be a long shot, the trial set to start Tuesday before a federal judge in Boston comes at a critical time for the industry. Domestic low-cost carriers have cut service as fares slide and travel slows, while antitrust regulators crack down on airline consolidation after decades of lax enforcement. JetBlue reported a Q3 loss Tuesday that was worse than Wall Street had expected, and said it would lose money for the full year. Spirit’s Q4 revenue forecast missed estimates last week and the stock is down more than 30% this year. The US Justice Department, along with six states and Washington DC, claims JetBlue’s bid for the largest deep-discount carrier would limit flight options, increase ticket prices and hurt cost-conscious travelers. JetBlue contends the combination is needed to better compete with the “Big Four” domestic airlines, American Airlines Group, Delta Air Lines, United Airlines and Southwest. If the deal is blocked for violating antitrust laws, JetBlue would have to pay Spirit and its shareholders a $470m breakup fee, according to their merger agreement.<br/>