Key Takeaways
- JetBlue and Spirit Airlines have terminated a proposed $3.8 billion merger.
- The merger would have created the fifth-largest domestic carrier, attracting antitrust scrutiny.
- JetBlue will pay $69 million in termination fees to Spirit.
- Both companies will now pursue plans to improve profitability, but there are concerns over Spirit’s financial condition.
JetBlue (JBLU) and Spirit Airlines (SAVE) have called off their $3.8 billion proposed merger after regulators blocked the deal.
Spirit Airlines stock skid nearly 15% as of 11 a.m. Eastern Time Monday, while shares in JetBlue were trading almost 4% higher.
The deal, announced in July 2022, would have created the fifth-largest carrier in the United States and that brought antitrust scrutiny from regulators. A federal judge ruled against the airlines at the beginning of this year.
While the companies said they still believed in the merits of the transaction, they are giving up on the merger since they won’t be able to acquire the necessary approvals by the July 2024 deadline. JetBlue will pay Spirit $69 million to settle the termination of the deal.
“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 Joanna Geraghty, chief executive officer of JetBlue.
“We are disappointed we cannot move forward with a deal,” said Spirit CEO Ted Christie. “However, we remain confident in our future as a successful independent airline.”
Both companies said they would now continue to pursue their own plans to improve profitability, but there are concerns over Spirit’s ability to finance a $1.1 billion debt load due in September 2025. An analyst at Cowen said the company could face bankruptcy and be forced out of business due to the collapse of the JetBlue merger, CNN reported.
Spirit Airlines has now lost around 72% of its value since the merger deal was first announced.
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