JetBlue Airways and Spirit Airlines On Monday, a fed said they were canceling the merger agreement just weeks after losing antitrust court challenging the deal.
A federal judge blocked the merger attempt in January after the Justice Department sued to block the deal, arguing 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 a few days later, but JetBlue noted that the appeal was required under the terms of the merger agreement.
Spirit shares were up 17% in premarket trading, while JetBlue shares were up about 4%.
“This was a bold and daring plan designed to shake up the industry status quo, and we were right to take on an opportunity to compete with Frontier that will fuel our growth and provide more opportunities for our crew members,” JetBlue CEO Joanna Geraghty said in a statement. Note to employees the next day.
“But with the federal court ruling and continued opposition from the Justice Department, the likelihood of a green light for the merger to move forward anytime soon is extremely low.”
JetBlue’s prospective acquisition of Spirit would be a lifeline for the struggling discount airline, which is facing the threat of grounding dozens of Airbus planes for inspections. Pratt and Whitney engine failure. Spirit is seeking compensation from the engine manufacturer as a result of the defect.
With the deal off the table, Spirit will have to deal with its financial problems on its own, which its leaders said it is equipped to do.
The company said it was working to refinance its debt and said last month it was on track to profitability thanks to better-than-expected demand. It forecast earnings for the first quarter that exceeded analysts’ expectations.
Spirit CEO Ted said, “Throughout the transaction process, given the regulatory uncertainty, we always considered the possibility of continuing to operate as an independent business and evaluated and implemented a number of initiatives that would allow us to strengthen profitability and enhance the Guest experience.” Christie said in a statement.
He said Spirit shareholders received $425 million in upfront payments from JetBlue during the deal, and JetBlue will pay Spirit $69 million upon termination of the deal.