Over the last four weeks, a judge in Boston was carefully listening to arguments about why JetBlue Airways (JBLU) -) should or should not have the right to purchase the low-coster Spirit Airlines (SAVE) -) for $3.6 billion.
Spirit shareholders approved the merger in October 2022 but, by March, the U.S. Department of Justice sought to block it over antitrust considerations. The core argument that DOJ's attorneys are trying to make to U.S. District Court Judge William Young is that Spirit's plans to increase airfare by as much as 40% will leave travelers with one less U.S. budget airline to choose from and, particularly in cities without a large airline presence, no choice but to pay whatever prices are set by the new merged airline.
Related: This airline would benefit from the Spirit/JetBlue merger
With closing remarks taking place on Tuesday morning between 9 and 11 a.m., Spirit shares are down 3.66% at $15.01. At different points throughout the last two days, they dropped by as much as 10% to $14.50. JetBlue shares have not dropped as dramatically but are still down 2% to $4.70.
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Court case anticipation is causing shares to fluctuate; here's how
While no ruling is expected to be made on Tuesday, Dec. 5, the anticipation around the court's looming decision as well as the different way the arguments turn have caused shares to fluctuate significantly.
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"JetBlue's own analysis of the deal shows that it would reduce the number of seats, reduce choice, and raise fares for millions of Americans," DOJ lawyer Arianna Markel had previously said in her opening statements at the start of November.
At different points in the trial, Spirit shares rose by as much as 33% when the tide of the arguments turned toward optimism for those who want to see the deal go through. In response to criticism of creating an anti-competitive environment, JetBlue had previously committed to selling its assets at Boston International and Newark Liberty airports to low-cost airline Allegiant as well as dedicating five gates previously used by Spirit at Fort Lauderdale International Airport to the same carrier.
JetBlue had also agreed to sell its holdings at New York’s LaGuardia Airport to Frontier Airlines (ULCC) -).
Here is what else you need to know about the Spirit-JetBlue court case
This also comes at a time when months of speculation and closed-door negotiations led to Alaska Airlines (ALK) -) announcing its plans to purchase Hawaiian Airlines (HA) -) in a $1.9 billion deal.
While a deal of this size would also need to be approved by regulators and is likely to face antitrust pushback, the announcement sent shares of both airlines soaring as well — Hawaiian stock, in particular, soared by more than 170% amid news of Alaska Airlines' plan to takes on its $900 billion in debt and purchase the airline at a 270% premium.
"We continue to believe merging with JetBlue and creating a viable competitor to the Big Four U.S. airlines is in the best interest of consumers, team members, and shareholders," Spirit CEO Ted Christie told investors during an earnings call in October. "We are prepared to make the necessary strategic shifts to enable Spirit to compete effectively in this new demand backdrop."
