US-based LCC JetBlue’s planned acquisition of rival Spirit may well go ahead, but it might take longer than anticipated according to one industry expert.
The proposed takeover, valued at $3.8bn, has so far been blocked by the Department of Justice due to concerns that competition on many routes would be seriously reduced. A court case on the issue is due to begin in October.
JetBlue’s management have since come up with a number of proposals that it hopes will allay the DoJ’s concerns. One of them would be to divest Spirit’s holding at New York’s LaGuardia Airport to Frontier Airlines. This plan raised hopes in Wall Street that the deal would be allowed to complete.
However, not all agree, “The Street has been far too optimistic on the timing,” Citi analyst Stephen Trent told the CNBC channel on September 21. “I think it’s going to take a long time, and I also believe that if you are JetBlue, there’s the risk that you are going to be overpaying for this asset. You are giving up the barn.”