I love how the Washington Post Editorial Board portrays this in the headline
The U.S. government killed Spirit Airlines
If you didn’t actually read the article you would think this was Trump’s fault
The rising price of jet fuel might be the final nail in the coffin for Spirit Airlines, but its final resting place was built by the U.S. government three years ago when it sued to block the budget carrier from being acquired by JetBlue. In the name of protecting competition, the Biden administration ensured there will be less of it. (snip)
This sad ending could have been averted if the Justice Department hadn’t moved to stop JetBlue from buying Spirit for $3.8 billion. Spirit was losing money but not on the brink of collapse. The deal was a lifeline, and the combined carrier would have been better positioned to compete with the majors.
Instead, a federal judge sided with the government in January 2024. Then-Attorney General Merrick Garland called it “yet another victory for the Justice Department’s work on behalf of American consumers.” But consumers cannot choose to fly an airline that does not exist.
It really was a case of “not every merger/acquisition being bad for consumers because the market shrinks”, but, the Biden DOJ didn’t consider what the outcomes would be. And now, will Spirit be swallowed up by Jet Blue or another carrier, or, just have their assets sold off? Can they come back from Chapter 11? Airlines shut down all the time. They merge. Where’s Midway? Where is Northwest Orient? And so many more?
This is a common consequence of antitrust enforcement. The government winds up picking winners and losers by pursuing companies for primarily political purposes. Politicians figure they win populist points, but the people they claim to represent end up suffering in the end.
It’s a problem when so many of the politicians and the big wigs in positions of power in federal agencies are lawyers or something else which has nothing to do with business, and do not understand the consequences. Or just do not care.
We’ve lost major, major airlines like TWA and Pan American, so it’s hardly a surprise when one of the junior carriers goes broke.
Hedge fund manager, “corporate raider” and billionaire ($6-7 billion) Carl Icahn invested in, took control of and took TWA private in 1988.
He loaded TWA with $540 million in debt (classic raider tactic), sold off valuable assets like their lucrative London routes, and took money out of the company leaving it financially insolvent before its 2001 demise, when it was purchased by American Airlines.
Upon leaving as chairman in 1993, Icahn negotiated a deal allowing Icahn Enterprises to purchase tickets at a 45% discount, allowing him to compete directly against TWA and costing the airline an estimated $100 million a year. TWA went bankrupt.
St Louis was the HQ of TWA and its central hub with multiple daily direct flights to every major US city!!
Lol
Remember Red Lobster going bankrupty and we were told it was because of their “endless shrimp”
Turns out Red Lobster was bought by Thai Union one of the largest global fish conglomerates. They forced Red Lobster into selling off its real estate
And then buying all of its seafood through Tjai Union
Bankruptcy
Such is capitalism without regulation
Ted Lobster’s other vendors took the loss