In a country steeped in Protestant moralism, judges’ decisions have the advantage of being readable by everyone. This is the case with the decision of Massachusetts federal judge William Young, who on Tuesday, January 16, banned the merger of the ultra-low-cost airline Spirit with JetBlue, also low-cost but a little more expensive.
“Eliminating Spirit would hurt cost-sensitive travelers who rely on low fares”writes the judge, who followed the requests of the Biden administration: “Throughout the trial, the government invoked the experience of the average Spirit customer: a college student from Boston hoping to visit her parents in San Juan, Puerto Rico; a large family from Boston planning a vacation to Miami who can only afford the trip at Spirit prices. It is this large category of consumers, those who must rely on Spirit, that this merger would harm. »
The Biden administration welcomed this: “Today’s decision is a victory for tens of millions of travelers who would have faced higher fares and fewer choices if the proposed JetBlue-Spirit merger had been allowed to move forwardsaid Attorney General Merrick B. Garland. The Department of Justice will continue to vigorously enforce the nation’s antitrust laws to protect American consumers. »
Spirit unravels on the stock market
Certainly, except that no act is completely moral: once the decision was known, Spirit shares fell by 48% on the stock market on Wednesday, while they continued their descent into hell with a further decline of 24% on Thursday. in the morning. The company is now worth only $870 million (€800 million). Diagnosed by Wall Street and many analysts, Spirit has no future and will simply go bankrupt.
In any case, this is the scenario of TD Cowen analyst Helane Becker: “We recognize that this sounds alarmist and harsh, but the reality is that we believe the scenarios are limited. In the short term, we believe the base case scenario for Spirit is to enter “Chapter 11” [de la loi sur les faillittes, qui permet à une entreprise de se restructurer] as soon as possible to preserve your capital. » “We are not convinced that an airline with limited free cash flow (none yet) and continued losses will be able to successfully restructure”, she adds.
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