JetBlue and Spirit Airlines are ending their proposed $3.8 billion combination after a court ruling blocked their merger.
JetBlue said Monday that even though both companies still believe in the benefits of a combination, they felt they were unlikely to meet the required closing conditions before the July 24 deadline and mutually agreed that terminating the deal was the best decision for both.
“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,” JetBlue CEO Joanna Geraghty said in a statement.
“We are disappointed we cannot move forward with a deal that would save hundreds of millions for consumers and create a real challenger to the dominant ‘Big 4’ U.S. airlines. However, we remain confident in our future as a successful independent airline,” Spirit CEO Ted Christie said in a statement.
JetBlue will pay Spirit a $69 million termination fee.
The Justice Department sued to block the merger last year, saying it would reduce competition and drive up fares, especially for travelers who depend on low-fare Spirit.
In January, a federal district judge in Boston sided with the government and blocked the deal, saying it violated antitrust law.
The airlines had appealed the ruling. The appeal hearing had been set for June.
New York-based JetBlue had argued that the merger would help it compete more effectively against bigger airlines. But there were continuing losses and other problems at Spirit, which is based in Miramar, Florida. Last week JetBlue had previously warned that it might terminate the agreement.
Shares of JetBlue Airways Corp. rose more than 5% before the market open, while Spirit’s stock slipped more than 13%.
JetBlue and Spirit Airlines have announced the termination of their proposed $3.8 billion merger following a court ruling that prevented the combination of the two airlines. The decision comes as a blow to both companies, who had been working towards finalizing the deal for several months.
The merger, which was first announced in February, was intended to create a stronger competitor in the increasingly competitive airline industry. By combining their resources and networks, JetBlue and Spirit hoped to better compete with larger carriers like American Airlines and Delta Air Lines.
However, the merger faced significant opposition from both consumers and regulators. Critics argued that the combination would reduce competition in the industry, leading to higher prices and fewer choices for travelers. In response to these concerns, the Department of Justice filed a lawsuit to block the merger, arguing that it would violate antitrust laws.
In a ruling issued last week, a federal judge sided with the Department of Justice, effectively putting an end to the merger plans. In a joint statement, JetBlue and Spirit announced that they had decided to terminate the deal in light of the court’s decision.
While the termination of the merger is a setback for both companies, it also presents an opportunity for them to refocus on their individual growth strategies. JetBlue, known for its customer-friendly policies and amenities, can continue to expand its route network and improve its services to attract more passengers. Spirit, on the other hand, can focus on its low-cost model and target budget-conscious travelers looking for affordable fares.
Despite the challenges posed by the failed merger, both JetBlue and Spirit remain optimistic about their future prospects. In their statement, they expressed their commitment to serving their customers and providing a high-quality travel experience.
As the airline industry continues to evolve, it will be interesting to see how JetBlue and Spirit adapt to the changing landscape. While the merger may have been off the table for now, both companies are likely to explore other opportunities for growth and expansion in the coming months.
