New York (AFP) – JetBlue and Spirit Airlines formally pulled the plug Monday on their merger, about six weeks after a federal judge ruled it violated US antitrust law.
The companies had positioned JetBlue’s $3.8 billion purchase of Spirit as beneficial to consumers, but a federal judge in January sided with the US Justice Department, which had argued that the removal of the no-frills Spirit would lead to higher fares.
The companies decided after concluding that, given the legal situation, they were unlikely to meet the merger’s deadline of July 24, 2024.
JetBlue will pay Spirit $69 million as a termination fee.
“We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines,” said JetBlue Chief Executive Joanna Geraghty.
“Given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently.”
US President Joe Biden hailed the decision in a post on X, formerly Twitter.
“This merger would have forced higher fares and fewer choices on tens of millions of Americans.My Administration’s historic success in blocking it is a win for American consumers and competition,” he said.
Shares of Spirit slumped 14.5 percent in early trading Monday, while JetBlue rose 3.9 percent.
Spirit remains confident “in our future as a successful independent airline,” said Chief Executive Ted Christie in a company statement.
“After discussing our options with our advisors and JetBlue, we concluded that current regulatory obstacles will not permit us to close this transaction in a timely fashion under the merger agreement,” he added.
“We are disappointed we cannot move forward with a deal that would save hundreds of millions for consumers,” he said.
Spirit said it has enlisted advisors on efforts to refinance and reduce debt payments.
© 2024 AFP
