A JetBlue Airways aircraft sits on the tarmac at Fort Lauderdale-Hollywood International Airport on January 31, 2024 in Fort Lauderdale, Florida.
Joe Raedle | fake images
JetBlue Airways and Spiritual airlines On Monday they said they would end their merger deal, weeks after losing a federal antitrust lawsuit that challenged the deal.
In January, a federal judge blocked JetBlue's attempt to acquire low-cost airline Spirit after the Justice Department sued to block the deal last year. The Justice Department alleged that the acquisition would stifle competition in the airline industry and eliminate Spirit as a discount alternative for price-conscious travelers.
JetBlue and Spirit appealed the judge's decision, but JetBlue said the appeal was necessary under the terms of the merger agreement. Analysts expected little chance of success in the appeal.
Spirit shares fell as much as 17% in premarket trading Monday, while JetBlue shares rose about 4%.
Nearly two years ago, JetBlue swooped in with an unsolicited offer for Spirit Airlines, which weeks earlier had reached a merger deal with another low-cost airline. Border. JetBlue finally won approval from Spirit shareholders to take over the discount airline.
“It was a bold and courageous plan aimed at changing the industry status quo, and we were right to compete with Frontier and pursue an opportunity that would have fueled our growth and provided more opportunities for crew members,” the company said in a statement. JetBlue CEO Joanna Geraghty. a note to staff on Monday.
“However, with the federal court ruling and continued opposition from the Department of Justice, the likelihood of getting the green light to move forward with the merger in the near term is extremely low,” he said.
JetBlue's possible purchase of Spirit would have been a boost for the troubled discount airline, which is facing the grounding of dozens of its Airbus planes for inspections stemming from a Pratt and Whitney engine defect. Spirit expects compensation from the engine manufacturer for the defect.
With the deal scrapped, Spirit must face its financial problems alone, something its leaders say it is prepared to do.
The company said it was working to refinance its debt and last month said it was on track to return to profitability thanks to better-than-expected demand. It projected first-quarter revenue above analysts' expectations.
“Throughout the transaction process, given the regulatory uncertainty, we have always considered the possibility of continuing to operate as an independent business and have been evaluating and implementing various initiatives that will allow us to strengthen profitability and improve the guest experience,” he said. Ted, CEO of Spirit. Christie said in a statement.
It said Spirit shareholders received $425 million in advance payments from JetBlue during the deal, and that JetBlue will pay Spirit $69 million related to the deal's termination.
