The blocked acquisition of Spirit Airlines by JetBlue Airways could have some bearing on another potential blockbuster deal in the US market: Alaska Airlines’ bid for Hawaiian Airlines.

Following the 16 January shock judicial decision denying New York-based JetBlue its wish to acquire ultra-low-cost carrier (ULCC) Spirit, that airline’s shares fell as much as 60% before recovering to $7.92, or 47% lower, by the close of trading.

But while the US government has been cracking down on airline consolidation, not all acquisitions are built the same, analysts say.

“We still believe there are important differences that drive a higher probability for the Alaska-Hawaiian merger to prevail,” says Savanthi Syth, aviation analyst at Raymond James.

Hawaiian A321neo

Source: Hawaiian Airlines

The blocked JetBlue-Spirit deal may have bearing on Alaska’s bid for Hawaiian

“Importantly, the proposal does not suggest the removal of seats and it doesn’t eliminate a price-disrupter model,” says Syth, adding that Alaska and Hawaiian are “hybrid” carriers with business models mixing features of low-cost and full-cost carriers. By comparison, JetBlue is a low-cost airline and Spirit is an ultra-low-cost player.

JetBlue had planned, following the acquisition, to remove seats on Spirit’s aircraft to make those jets more like JetBlue’s.

Syth says Alaska and Hawaiian have little network overlap. But, she adds, “There could be concentration concerns in the Hawaii-continental US market. Of note, the failing company doctrine had little sway on Judge Young in his review of the JetBlue-Spirit case.”

Last week, TD Cowen’s Helane Becker wrote that, “if the DOJ keeps an open mind, [the Alaska-Hawaiian] merger should be approved”.

Alaska Airlines, meantime, says the JetBlue-Spirit decision “does not impact our plans to combine with Hawaiian Airlines”.

“Our deal combines two airlines with complementary networks and we believe the transaction will enhance competition and expand choice for consumers,” the Seattle-based carrier said in reaction to the court’s decision.

Earlier in the day, US District Judge William Young blocked JetBlue’s proposed $3.8 billion acquisition of Spirit, a deal signed in July 2022.

The decision is a major setback for JetBlue’s growth strategy and upends the carrier’s all-out pursuit of Spirit’s assets – namely, its fleet of narrowbody Airbus jets. The carrier has described the deal as critical to its ambitions of competing with major US airlines.

Frontier Airlines, which initially bid to buy Spirit in February 2022 but stepped back after JetBlue won a bidding war, also did not respond to a request for comment. Analysts have speculated whether Frontier might once again vie for the Miramar, Florida-based carrier.

The court ruling is JetBlue’s second such defeat in as many years, after a judge in the same court blocked its so-called “Northeast Alliance” with American Airlines in 2023.

Investors will be hoping for more information about the Alaska-Hawaiian transaction, announced last month, when the former holds its fourth-quarter earnings call on 25 January, and the latter five days later.