(Bloomberg) -- The top executive at JetBlue Airways Corp. called out federal antitrust authorities for policies she says have exacerbated competitive imbalances and made it harder for small airlines to turn a profit.
Chief Executive Officer Joanna Geraghty said in an interview that the US Department of Justice has been “a bit short-sighted” when evaluating corporate acquisitions in recent years. JetBlue has had two tie-ups dashed by regulators recently, including a planned acquisition of Spirit Airlines Inc. that fell apart earlier this year.
The comments come days after rival Alaska Air Group Inc. was allowed to complete its purchase of Hawaiian Holdings Inc., the first significant merger in the US airline industry in years. Still, the deal isn’t likely to alter the broader dynamics in the industry, which is dominated by four large carriers.
“If you look today at the airlines that are profitable and those that aren’t,” regulators are “playing right into the hands of the big guys,” Geraghty told Bloomberg Thursday. “That really requires them to take a look at their antitrust policies and make sure that they’re not so focused on a textbook approach and much more on a practical, real life approach.”
JetBlue’s deal for Spirit was scuttled by a federal judge earlier this year after the Biden administration said the tie-up would eliminate a deep discount carrier and harm consumers by reducing competition and increasing fares. An alliance with American Airlines Group Inc. that focused on New York and Boston met the same fate and was dismantled.
Geraghty is currently leading a rebuilding of JetBlue, which hasn’t been consistently profitable for four years, in part due to a focus on securing growth through the deals. Spirit is struggling financially and recently furloughed some pilots. Geraghty said regulators fail to understand the human impact of their decisions to block some mergers.
“The textbook DOJ person needs to look those people in the eye and realize their decisions have impacted people’s lives,” she said.
The Justice Department didn’t immediately comment.
Regulatory Push
Airlines are also facing mounting pressure from the US Transportation Department, which has used its consumer protection powers to take action targeting carrier fee, refund and reward policies.
In a win for the industry, airlines recently convinced a federal appeals court to temporarily block new regulations requiring up-front disclosure of certain fees, saying the department may have overstepped its authority. Most recently, US Transportation Secretary Pete Buttigieg announced a broad probe of loyalty programs at the four largest US airlines.
Geraghty warned that low-cost tickets and other benefits of the industry’s deregulation in 1978 could be undone if the government goes overboard.
“We’ve got to be very careful,” Geraghty said. “Over time, we don’t want these regulations to ultimately impact pricing for customers. We want to have affordable air fares that are accessible to everybody, and that requires competition.”
Activist Target
Geraghty’s tenure as CEO has been marked by activist campaigns, beginning when Carl Icahn took a 10% stake in the carrier earlier this year. He eventually secured two seats on JetBlue’s board.
The company has had “really constructive discussions” with Icahn’s representatives on the board, Geraghty said during remarks at the Skift Global Forum in New York. She declined to discuss whether Icahn is also pushing for changes at JetBlue, but said “the full board is on board” with plans over the next several years to return the carrier to profits and grow via its existing network, without relying on deals.
She also confirmed meeting with Vladimir Galkin, a little-known Florida entrepreneur who is now contemplating a board seat after amassing a large stake in the carrier.
“He shares the same views that JetBlue is potentially a great deal, our stock price is low and there’s opportunity there,” Geraghty said in the interview. “He has put a lot of personal wealth into the company and we’re focused on delivering for all our shareholders and all of our owners.”
(Updates with CEO on DOT actions from the ninth paragraph.)
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