|
WASHINGTON, March 7 (Reuters) – The U.S. Justice Department filed suit on Tuesday to stop JetBlue Airways Corp (JBLU.O) from buying Spirit Airlines Inc (SAVE.N), saying the planned $3.8 billion merger “will lead to higher fares and fewer seats, harming millions of consumers on hundreds of routes.”
Attorney General Merrick Garland said Spirit’s internal documents show that when it enters a market fares fall by 17% while JetBlue’s internal documents show that when Spirit stops flying a route, fares go up by 30%.
“The merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly,” Garland told a news conference.
Spirit shares were up 3.8% on Tuesday afternoon at $16.98 after dipping the previous day on expectations of a lawsuit. JetBlue shares were down 0.5% at $8.36.
“We believe the DOJ has got it wrong on the law here and misses the point that this merger will create a national low-fare, high-quality competitor to the Big Four carriers which – thanks to their own DOJ-approved mergers – control about 80% of the U.S. market,” JetBlue CEO Robin Hayes said in a statement on Tuesday.
“There is too much at stake for the DOJ to prevent us from bringing the JetBlue difference to more customers in more markets,” he added.
The lawsuit is the latest attempt by the Biden administration to push back against further consolidation in certain industries.
“Companies in every industry should understand by now that this Justice Department will not hesitate to enforce our antitrust laws and protect American consumers,” Garland said.
The 39-page complaint, filed in Boston federal court, said the merger would “combine two especially close and fierce head-to-head competitors.” It called the deal “presumptively illegal.”
The Justice Department, whose lawsuit was joined by Massachusetts, New York and Washington, D.C., also said that JetBlue planned to remove 10% to 15% of seats from every Spirit plane.
“Fewer seats means fewer passengers – and higher prices for those who can still afford to make their way onto the plane. This is unlikely to stop business travelers flying on corporate expense accounts, but would put travel out of reach for many cost-conscious travelers,” the complaint said.
JetBlue has argued that the merger, which would create the fifth-largest U.S. carrier with a market share of 9%, was good for competition and would allow it to better compete with the big airlines.
The Transportation Department said on Tuesday it fully supports the lawsuit and plans to deny an exemption application asking the department to permit the carriers to operate under common ownership prior to the requested transfer.
U.S. Judge Leo Sorokin will hear the case. Sorokin also heard the Justice Department lawsuit in which the government asked the court to force JetBlue and American Airlines Group Inc (AAL.O) to scrap their Northeast Alliance. The companies are awaiting a decision after a trial last year.
Sorokin was nominated by then-President Barack Obama.
JetBlue had previously said it expected the deal for Spirit to close in early 2024, leaving time for litigation if necessary.
JetBlue prevailed in a months-long bidding war for Spirit Airlines after the ultra-low-cost carrier accepted its offer in late July.
From the beginning, JetBlue’s acquisition of Spirit had been expected to face a tough antitrust review because the four biggest carriers – American Airlines, United Airlines (UAL.O), Delta Air Lines (DAL.N) and Southwest Airlines (LUV.N) – control 80% of the U.S. domestic market.
JetBlue and Spirit have offered to sell Spirit’s holdings in Boston and New York, along with some assets in Florida, in a bid to ease the government’s antitrust concerns.
Florida Attorney General Ashley Moody on Monday resolved a state probe into the deal after the airlines agreed to increase seat capacity by at least 50% in both Fort Lauderdale and Orlando airports if the merger is completed.
[unable to retrieve full-text content]
Netflix (NFLX) stock slid as much as 9.6% Friday after the company gave a second quarter revenue forecast that missed estimates and announced it would stop reporting quarterly subscriber metrics closely watched by Wall Street.
On Thursday, Netflix guided to second quarter revenue of $9.49 billion, a miss compared to consensus estimates of $9.51 billion.
The company said it will stop reporting quarterly membership numbers starting next year, along with average revenue per member, or ARM.
“As we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact,” the company said.
Netflix reported first quarter earnings that beat across the board on Thursday, with another 9 million-plus subscribers added in the quarter.
ADVERTISEMENT
Subscriber additions of 9.3 million beat expectations of 4.8 million and followed the 13 million net additions the streamer added in the fourth quarter. The company added 1.7 million paying users in Q1 2023.
Revenue beat Bloomberg consensus estimates of $9.27 billion to hit $9.37 billion in the quarter, an increase of 14.8% compared to the same period last year as the streamer leaned on revenue initiatives like its crackdown on password-sharing and ad-supported tier, in addition to the recent price hikes on certain subscription plans.
Netflix’s stock has been on a tear in recent months, with shares currently trading near the high end of its 52-week range. Wall Street analysts had warned that high expectations heading into the print could serve as an inherent risk to the stock price.
Earnings per share (EPS) beat estimates in the quarter, with the company reporting EPS of $5.28, well above consensus expectations of $4.52 and nearly double the $2.88 EPS figure it reported in the year-ago period. Netflix guided to second quarter EPS of $4.68, ahead of consensus calls for $4.54.
Profitability metrics also came in strong, with operating margins sitting at 28.1% for the first quarter compared to 21% in the same period last year.
The company previously guided to full-year 2024 operating margins of 24% after the metric grew to 21% from 18% in 2023. Netflix expects margins to tick down slightly in Q2 to 26.6%.
Free cash flow came in at $2.14 billion in the quarter, above consensus calls of $1.9 billion.
Meanwhile, ARM ticked up 1% year over year — matching the fourth quarter results. Wall Street analysts expect ARM to pick up later this year as both the ad-tier impact and price hike effects take hold.
On the ads front, ad-tier memberships increased 65% quarter over quarter after rising nearly 70% sequentially in Q3 2023 and Q4 2023. The ads plan now accounts for over 40% of all Netflix sign-ups in the markets it’s offered in.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Read the latest financial and business news from Yahoo Finance
Oil prices gave up nearly all of early Friday’s gains after an Iranian official told Reuters that there hadn’t been a missile attack against Iran.
Oil surged by as much as $3 per barrel in Asian trade early on Friday after a U.S. official told ABC News today that Israel launched missile strikes against Iran in the early morning hours today. After briefly spiking to above $90 per barrel early on Friday in Asian trade, Brent fell back to $87.10 per barrel in the morning in Europe.
The news was later confirmed by Iranian media, which said the country’s air defense system took down three drones over the city of Isfahan, according to Al Jazeera. Flights to three cities including Tehran and Isfahan were suspended, Iranian media also reported.
Israel’s retaliation for Iran’s missile strikes last week was seen by most as a guarantee of escalation of the Middle East conflict since Iran had warned Tel Aviv that if it retaliates, so will Tehran in its turn and that retaliation would be on a greater scale than the missile strikes from last week. These developments were naturally seen as strongly bullish for oil prices.
However, hours after unconfirmed reports of an Israeli attack first emerged, Reuters quoted an Iranian official as saying that there was no missile strike carried out against Iran. The explosions that were heard in the large Iranian city of Isfahan were the result of the activation of the air defense systems of Iran, the official told Reuters.
Overall, Iran appears to downplay the event, with most official comments and news reports not mentioning Israel, Reuters notes.
The International Atomic Energy Agency (IAEA) said that “there is no damage to Iran’s nuclear sites,” confirming Iranian reports on the matter.
The Isfahan province is home to Iran’s nuclear site for uranium enrichment.
“Brent briefly soared back above $90 before reversing lower after Iranian media downplayed a retaliatory strike by Israel,” Saxo Bank said in a Friday note.
The $5 a barrel trading range in oil prices over the past week has been driven by traders attempting to “quantify the level of risk premium needed to reflect heightened tensions but with no impact on supply,” the bank said, adding “Expect prices to bid ahead of the weekend.”
At the time of writing Brent was trading at $87.34 and WTI at $83.14.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
<!–
–>
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
DJT Stock Rises. Trump Media CEO Alleges Potential Market Manipulation. – Barron's
Trump Media alerts Nasdaq to potential market manipulation from 'naked' short selling of DJT stock – CNBC
Private equity gears up for potential National Football League investments – Financial Times
2024 Stanley Cup Playoffs 1st-round schedule – NHL.com
Want to Outperform 88% of Professional Fund Managers? Buy This 1 Investment and Hold It Forever. – The Motley Fool
Toronto reports 2 more measles cases. Use our tool to check the spread in Canada – Toronto Star
Gas prices see 'largest single-day jump since early 2022': En-Pro International – Yahoo Canada Finance
Botched home sale costs Winnipeg man his right to sell real estate in Manitoba – CBC.ca