Top NewsJetBlue and Spirit are ending their tie-up

JetBlue and Spirit are ending their tie-up

JetBlue Airways and Spirit Airlines announced Monday that they are withdrawing from their planned $3.8 billion merger after federal antitrust regulators successfully challenged the deal in court. JetBlue said it would pay Spirit $69 million to get out of the deal.

A federal judge in Boston blocked the proposed merger on Jan. 16, ruling in favor of the Justice Department that the merger would reduce competition in the industry and give airlines more room to raise ticket prices. Judge William G. of the United States District Court for the District of Massachusetts. Young noted that Spirit had a dominant role in the market as a low-cost carrier, and that if JetBlue absorbed it, passengers would have fewer options.

“We're proud of the work we've done with Spirit to challenge the status quo, but given the remaining hurdles to closing, we've decided together that the interests of both airlines are best served by moving forward independently,” JetBlue's president said. Administrator, Joanna Geraghty, said in a statement on Monday. “We wish the entire Spirit team well moving forward.”

JetBlue and Spirit appealed Judge Young's decision. JetBlue filed an appellate brief last week, arguing that the deal should be allowed to go through.

But in a regulatory filing on Jan. 26, JetBlue said it may end the deal. In its own filing the same day, Spirit said it believed there was “no basis to terminate” the deal.

The merger agreement, which was finalized on Jan. 28, could have been extended to July 24 if certain conditions were met. But JetBlue suggested in a January filing that Spirit was not meeting some of its obligations under the contract.

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As part of the merger agreement, JetBlue agreed to pay $470 million in fees to Spirit and its shareholders if the deal is blocked. Some legal experts said JetBlue would position itself to deny the remainder of those fees by terminating the contract.

Spirit is heavily indebted and last turned profitable before the Covid-19 pandemic. Investors see mergers as the lifeblood of the company. Its share price has lost more than half its value.

JetBlue's stock also rose on the news as investors viewed the deal's end as a cost-saving measure.

A merger of the airlines would have given the combined company a larger share of the market, dominated by four carriers: American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.

Alaska Airlines also plans to increase its size. In December, it said it wanted to buy Hawaiian Airlines for $1.9 billion. That deal will attract scrutiny from federal antitrust regulators.

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