JetBlue, Spirit Airlines terminate merger agreement
JetBlue Airways and Spirit Airlines announced Monday that they have terminated their merger agreement after a federal judge blocked it nearly two months ago.
The airlines, in two separate statements, announced they reached an agreement to terminate the merger announced in July 2022, calling it the “best path forward.”
JetBlue said the necessary legal and regulatory approvals were unlikely to be reached by the merger agreement’s deadline in July of this year.
“We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines,” JetBlue Airways Corp. CEO Joanna Geraghty said Monday. “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.”
Spirit Airlines Inc. President and CEO Ted Christie echoed these remarks, saying the company is “disappointed” the deal cannot move forward. He claimed the deal would have saved “hundreds of millions for consumers and create a real challenger to the dominant ‘Big 4’ U.S. airlines.”
Under the merger termination, JetBlue said it will pay Spirit $69 million, and all outstanding matters regarding the transaction will be “mutually released.”
JetBlue’s proposed $3.8 billion purchase of Spirit Airlines was blocked in mid-January after a federal judge ruled it would reduce competition and hurt consumers. The deal would have made JetBlue the fifth-largest airline. In his ruling, U.S. District Judge William Young said it would “substantially lessen competition” in violation of the Clayton Act, which was “designed to prevent anticompetitive harms for consumers.”
Young argued the merger would also eliminate JetBlue’s largest competition and increase prices for cost-conscious consumers. Spirit is the country’s biggest low-cost airline.
Young’s ruling was in response to the Department of Justice’s lawsuit to halt the merger. Attorney General Merrick Garland said last year the merger would “limit choices and drive up ticket prices for passengers across the country.”
The airlines quickly appealed Young's ruling, with JetBlue at the time arguing it was necessary to purchase the smaller airline to allow for greater competition with larger airlines.
A U.S. Circuit Court of Appeals in Boston last month said it would hear the case in June.