JetBlue and Spirit Airlines have abandoned their proposed $3.8 billion merger following a court decision that blocked the deal.
JetBlue announced on Monday that despite their belief in the benefits of combining forces, they deemed it unlikely to meet the necessary closing conditions before the July 24 deadline. As a result, both companies mutually agreed to terminate the merger, deeming it the most favorable decision for their respective interests.
JetBlue CEO Joanna Geraghty stated, “We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently.”
Spirit CEO Ted Christie expressed disappointment over the inability to proceed with a deal that could have provided significant savings for consumers and created a strong competitor against the dominant U.S. airlines. Despite this setback, Christie affirmed confidence in Spirit’s future as an independent airline.
JetBlue will pay Spirit a $69 million termination fee as part of the agreement.
The Justice Department had filed a lawsuit to block the merger, arguing that it would diminish competition and lead to increased fares, particularly affecting travelers reliant on low-cost Spirit flights. In January, a federal district judge in Boston ruled in favor of the government, citing antitrust concerns and prohibiting the merger.
Although the airlines had appealed the ruling, with an appeal hearing scheduled for June, the decision to terminate the merger indicates a definitive end to the proposed consolidation.
JetBlue, headquartered in New York, had asserted that the merger would enhance its competitiveness against larger carriers. However, ongoing losses and challenges at Spirit, headquartered in Miramar, Florida, added complexity to the merger process. Last week, JetBlue had signaled the possibility of terminating the agreement.
Following the announcement, shares of JetBlue Airways Corp. surged more than 5% in pre-market trading, while Spirit’s stock declined by over 13%.
The termination of the merger represents a significant development in the airline industry, shaping the competitive landscape and signaling the continuation of independent operations for both JetBlue and Spirit Airlines.
