JetBlue Considered Buying Alaska Airlines

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It is not uncommon for court proceedings to elicit revelations throughout the trial. This is one.

It was disclosed on Monday, during the antitrust lawsuit filed by the Department of Justice to prevent the merger of Spirit Airlines and JetBlue Airways, that JetBlue attempted to acquire Alaska Airlines.

The extent to which it influences the trial is uncertain; however, it validates JetBlue’s acquisition-based growth strategy at the very least.

Indeed, as evidenced by the testimony of JetBlue CEO Robin Hayes, the airline attempted to merge with a number of lesser competitors in an effort to compete with American, Delta, United, and Southwest. These four airlines collectively dominate the airline industry to the tune of 80%.

JetBlue made an acquisition attempt on Virgin America in 2015; however, Alaska Airlines outbid JetBlue. A transaction in which JetBlue and Spirit Airlines merged last year for $3.8 billion is presently subject to investigation by the Department of Justice.

Some analysts believe JetBlue may have paid an excessive amount to merge with Spirit after competing with Frontier.

Despite facing opposition from Virgin America, JetBlue persisted in pursuing its acquisition strategy. In 2017, the airline also considered two other carriers, one of which was Spirit; however, the identity of the other carrier was redacted in court documents.

Spirit’s prohibitively expensive purchase price prevented the scheme from being implemented at the time. In 2019, however, JetBlue reached an agreement with Spirit known as “Project Exchange.” It presented an opportunity for Hayes to challenge the Big Four airlines.

Hayes stated that he does not foresee any additional acquisitions occurring if this transaction is approved, primarily because of the risk of regulatory denial.

Spirit’s assertion last week that it shared the same perspective regarding the necessity of acquisitions to contend with the Big Four may also prove to be a pertinent element.

Regardless of the final verdict, aviation is anticipated to be profoundly affected by the trial.

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