By Noel S. Williams

We hope judges have sagacity, but they can be as stupid as anyone. Prone to conceptual obsolescence, they may become overconfident in their experience. Perhaps gloating with pride at achieving lifetime tenure, some have little self-awareness in their cozy chambers or incentive to update their cognitive skills.

That may describe the judge who ruled against the merger of JetBlue and Spirit Airlines. After all, stupid is as stupid does, and what he did is somewhat stupid.

A key characteristic of stupidity is that actions hurt oneself and others. No one benefits. That is exactly what U.S. District Judge William Young in Boston accomplished in blocking the buyout of Spirit by JetBlue on antitrust grounds. The DOJ maintained that the deal between the airlines was anti-competitive and anti-consumer. However, the judge’s decision may ultimately undermine the DOJ’s explicit purpose by weakening competition. It may seal the fate of a no-frills airline business model, or at least limit their routes, removing travel options for fliers.

Despite his acknowledgement that the JetBlue-Spirit combination would likely place “stronger competitive pressure” on larger carriers that dominate the domestic airline market, Judge Young emphasized that “the consumers that rely on Spirit’s unique, low-price model would likely be harmed.”

That’s where his stupidity (smart people can be stupid) is tainting his judgment.

First, there is already excess industry capacity in the markets that low-cost provider Spirt Airlines serves. Indeed, Spirit is struggling to eke out small losses, let alone a profit, from its frugal flights. Even a cocooned judge, determined to concoct his own relevant markets and routes, should be able to see the relationship between excess capacity and pricing fundamentals.

Second is the judge’s quixotic notion that Spirit Airlines can flourish as a standalone company, able to serve the cost-conscious consumers he so values. Absent the acquisition by JetBlue, Spirit Airlines may very well experience a hard landing. How is that going to increase competition and help consumers?

That’s not spurious speculation, or the expostulation of someone who’d rather that government pinheads not enforce industrial policy in a free market. Indeed, credit rating agency Fitch discussed Spirit’s “significant refinancing risk” for its debt due in 2025. S&P Global Ratings also lowered Spirit’s credit rating. Whether or not the company is exploring restructuring options, as some speculated, they are in scramble mode — even imploring JetBlue to appeal the ruling (which it agreed to do).

Spirit’s stock price plunged over 60% after the ruling, and analysts at Citi downgraded it to “sell.” It has bounced a bit after the rout. All that because stupid is as stupid does.

If JetBlue’s acquisition of Spirit imposes “stronger competitive pressure” on larger carriers, then it’s preposterous for some overzealous bureaucrat to question their business plan. Within reasonable business regulations, and strict safety ones, it should be up to airline executives on how to run their business, including upgrading the flawed Spirt Airlines business model as markets dictate. Indeed, to enhance profitability, JetBlue is cutting routes — seems judge Young’s stupid decision is already backfiring.

Apparently, presumptuous DOJ lawyers argued that Spirit Airlines will be able to conduct business profitably as a standalone company. Do they know more than the company’s CFO, who was forthright about their debt obligations?

Do they know more than industry analysts on Wall Street, including those from JPMorgan, T.D. Cowen, Citigroup, Melius Research, and others? They all question Spirit Airlines’s ongoing ability to operate as a going concern. The stock’s price choppiness since Judge Young’s ill-advised ruling may further diminish their leverage to conduct favorable financial transactions.                                                                                             

That ought to make Biden’s antitrust regulators happy; indeed, the DOJ is celebrating a “win.” U.S. Attorney General Merrick Garland seemed downright giddy, describing the ruling as “a victory for tens of millions of travelers who would have faced higher fares and fewer choices had the proposed merger between JetBlue and Spirit been allowed to move forward.”

Joe Biden is always giddy, as his administration recklessly pursues antitrust enforcement. In response to the judge’s ruling, Biden said it is “a victory for consumers everywhere who want lower prices and more choices.” That’s curious; Spirit Airlines specializes in fee-based services, such as charges for luggage, drinks, reserved seats, and probably condiments. I thought Biden was opposed to the types of so-called “junk fees” that Spirt levies on frugal customers.

It is toward Biden, Garland, and their malevolent minions that we should have “anti-trust.”

It is a pyrrhic victory. If the regulatory harassers have their way, Spirit’s “unique, low-price model” may become extinct. With no white knight to reinvigorate its operations, the consumers whom the judge was trying to protect may have to hop on a Greyhound or other intercity bus service instead.

Attired in a black robe, one presumes Judge Young is intelligent. But intelligent people, especially entrenched careerists who receive little feedback from intimidated underlings, exaggerate their competence and are prone to make mistakes. Unchallenged, there is little self-appraisal, and their biased assumptions fester. Common sense is not their forte. Stupid is as stupid does.

In his ruling, Judge Young exhorted, “The removal of Spirit as an option for consumers, therefore, would constitute a cognizable harm.” Following his injudicious judgment, Spirit Airlines is on the brink; hopefully, it survives, but bankruptcy may loom. That would produce a lot of cognizable harm to employees and consumers.

It may be a bit churlish to be disrespectful toward an octogenarian judge nominated by President Reagan, but Judge Young is old. It’s time to hang up the robe. He may suffer from something with a highfalutin description, like “cognitive obsolescence,” but I prefer Forest Gump’s definition: “stupid is as stupid does.”