JetBlue, Spirit agree to terminate merger over regulatory issues
JetBlue, Spirit deal was announced in 2022
Low-cost carriers JetBlue and Spirit agreed to terminate their $3.8 billion merger agreement after facing significant regulatory and legal hurdles.
On Monday, the airlines issued a joint statement saying that the decision "is the best path forward" because the companies likely wouldn't be able to meet closing conditions, which included receiving legal and regulatory approvals by the deal's July 2024 deadline.
"We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently," said JetBlue CEO Joanna Geraghty.
JUDGE BLOCKS $3.8B JETBLUE-SPIRIT MERGER, CITES 'ANTICOMPETITIVE HARM'
A JetBlue airliner lands past a Spirit Airlines jet on taxi way at Fort Lauderdale Hollywood International Airport on Monday, April 25, 2022. (Joe Cavaretta/Sun Sentinel/Tribune News Service via Getty Images / Getty Images)
Geraghty, who took over as CEO last month, argued the deal, announced in July 2022, "would have unleashed a national low-fare, high-value competitor to the Big Four airlines."
Spirit CEO Ted Christie also argued that the deal "would save hundreds for millions for consumers and create a real challenger to the dominant ‘Big 4’ U.S. airlines."
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"However, we remain confident in our future as a successful independent airline," Christie added.
From December 2022 to November 2023, American, United, Delta and Southwest account for 80% of the domestic market share, according to the most recent data from the Transportation Department.
A man talks on his cell phone while looking at a JetBlue Airways Airbus A320-200 plane at LaGuardia Airport in New York. (JETBLUE/ REUTERS/Lucas Jackson / Reuters Photos)
In comparison, JetBlue and Spirit accounted for 5.3% and 5.1%, respectively.
Attorney General Merrick Garland said the airlines' agreement to terminate the deal is a "victory for the Justice Department’s work on behalf of American consumers."
"The Justice Department proved in court that a merger between JetBlue and Spirit would have caused tens of millions of travelers to face higher fares and fewer choices," he added. "We will continue to vigorously enforce the nation’s antitrust laws."
In January, a federal judge blocked JetBlue's acquisition of Spirit after agreeing with the Justice Department that the deal would hurt the availability of low-cost air travel tickets.
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U.S. District Judge William Young wrote that the proposed merger between JetBlue and Spirit "does violence to the core principle of antitrust law: to protect the United States’ markets – and its market participants – from anticompetitive harm."
Young also argued that "consumers that rely on Spirit's unique, low-price model would likely be harmed."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JBLU | JETBLUE AIRWAYS CORP. | 5.69 | +0.03 | +0.53% |
| SAVE | SPIRIT AIRLINES INC. | 3.40 | +0.08 | +2.41% |
In short order, the carriers filed a notice of appeal with the First U.S. Circuit Court of Appeals to try and reverse the decision.
After getting dealt a major blow, people familiar with the matter told The Wall Street Journal that Spirit was looking for ways to address its financial challenges.
FOX Business' Eric Revell contributed to this report.