JetBlue Airways could potentially raise airfares on certain routes by up to 40%, as indicated by internal estimates accidentally revealed in court filings.
Impact on JetBlue's Case against the Justice Department
These revelations may have a detrimental effect on JetBlue's prospects of winning its case against the Justice Department. The Justice Department is currently suing to block the $3.8 billion merger between JetBlue and Spirit Airlines, which would establish the fifth-largest U.S. airline.
Supporting the DOJ's Argument on Fare Increases
The documents, initially filed in a separate consumer lawsuit, seem to corroborate the DOJ's main contention that the merger will lead to higher fares.
Error in the Document Filing
Earlier this week, lawyers representing a group of travelers submitted these documents. However, an error in the filing process, as highlighted by legal news site Law360, inadvertently allowed previously redacted information to be visible when copied into a new document.
Fare Hike Plans for Spirit Aircraft
According to the improperly redacted information, JetBlue intends to implement fare increases ranging from at least 24% to as high as 40% for aircraft acquired from Spirit.
In response to this information leak, JetBlue has emphasized that the redacted information, when taken out of context, provides an inaccurate portrayal of the facts. The company argues that its merger with Spirit Airlines will actually enhance airline competition in the U.S., leading to more affordable fares and improved service quality for customers.
JetBlue has not yet commented on these recent developments as of early Friday.
JetBlue's Legal Battle with the DOJ
JetBlue recently faced a setback as a result of a "botched filing," which has raised concerns both for the airline and its customers. However, the company will have the opportunity to present its case and clarify the context behind its plans to increase fares when the lawsuit with the Department of Justice (DOJ) goes to trial in October.
This legal battle has taken on heightened significance for JetBlue since its decision to end its alliance with American Airlines (AAL) last month. Despite a court ruling ordering the termination of their partnership in the New York and Boston areas, JetBlue chose not to contest the decision.
The DOJ's complaint against JetBlue and American Airlines heavily relied on their alliance, arguing that it would effectively merge the operations of three major airlines in the Northeast. In response, JetBlue asserts that terminating the partnership renders the DOJ's concerns irrelevant.
While sacrificing the partnership with American might have been a strategic move to boost the chances of its merger with Spirit being approved, it now leaves JetBlue without two potential sources of growth if the Spirit deal is blocked.
JetBlue recently revised its full-year earnings guidance, lowering expectations and predicting a lack of profitability in the third quarter. The termination of the partnership with American Airlines was cited as a significant factor, alongside a slowdown in domestic demand.
As a consequence, the company's stock has experienced a sharp decline of 34% since reaching its peak in July. With a 5% decline in stock performance for the year, JetBlue is in dire need of positive news, although the prospects may seem uncertain at present.