JetBlue and its partners had presented their $3.8 billion acquisition of Spirit as advantageous for customers; however, in January, a federal judge ruled in favor of the US Justice Department, which maintained that the elimination of the basic Spirit would result in increased airfares.
US state of New York: After nearly six weeks, a federal judge determined that JetBlue and Spirit Airlines’ merger violated US antitrust law, the companies formally called off their merger on Monday.
JetBlue and its partners had presented their $3.8 billion acquisition of Spirit as advantageous for customers; however, in January, a federal judge ruled in favor of the US Justice Department, which maintained that the elimination of the basic Spirit would result in increased airfares.
Having determined that they were unlikely to meet the merger’s July 24, 2024 deadline given the current legal state of affairs, the companies made their decision.
As part of the termination fee, JetBlue will give Spirit $69 million.
The merger would have unleashed a nationwide low-cost, high-value competitor to the Big Four airlines, so we thought it was worth pursuing,” stated Joanna Geraghty, chief executive of JetBlue.
“Given the challenges that still need to be cleared before we can close, we concluded that moving forward independently serves the best interests of both airlines.”
JetBlue has a “strong organic plan” that includes cost reductions and an expanded loyalty program, according to Geraghty.
Chief Executive Ted Christie stated in a company statement that Spirit is still “confident in our future as a successful independent airline.”
The current regulatory barriers will not allow us to complete this transaction in a timely manner as required by the merger agreement, Christie continued, “after discussing our options with our advisors and JetBlue.”
He expressed disappointment that the agreement, which would have saved hundreds of millions of dollars for customers and established a serious competitor to the powerful “Big 4” US airlines, could not go through.
Perella Weinberg & Partners and Davis Polk & Wardwell have been tasked by Spirit with providing advice on debt refinancing options that would lower payments.
On Monday morning, Spirit’s stock fell 9.3% while JetBlue’s stock increased by 3.0%.