JetBlue Airways and Spirit Airlines have announced the termination of their $3.8 billion merger agreement following a defeat in a federal antitrust lawsuit. The decision comes after a federal judge blocked JetBlue’s attempted takeover of Spirit, citing concerns over competition in the airline industry.
The Justice Department had sued to bar the deal, claiming that it would stifle competition and eliminate Spirit as a discount alternative for price-conscious travelers. Despite appealing the judge’s decision, analysts had predicted a slim chance of a successful outcome for JetBlue and Spirit.
The news has had an immediate impact on the stock market, with shares of Spirit Airlines tumbling by 17% in premarket trading. On the other hand, shares of JetBlue saw a rise of roughly 4%. These fluctuations reflect the market’s reaction to the termination of the merger agreement.
The attempted merger between JetBlue and Spirit was initiated almost two years ago when JetBlue made an unsolicited bid for Spirit Airlines. Spirit had already struck a merger agreement with fellow budget airline Frontier but ultimately gained shareholder approval to be acquired by JetBlue.
JetBlue CEO Joanna Geraghty expressed disappointment over the termination of the merger agreement in a note to staff. She described the bid as a bold plan to shake up the industry status quo and provide more opportunities for crew members. However, with the ruling from the federal court and continued opposition from the Department of Justice, the likelihood of obtaining approval for the merger in the near future was deemed extremely low.
The termination of this merger agreement marks a significant setback for both JetBlue and Spirit. The anticipated benefits of the merger, such as increased growth and expanded opportunities, will now be put on hold. Additionally, this development highlights the challenges faced by airlines in navigating antitrust regulations and ensuring fair competition.
As this is breaking news, further updates are expected to shed light on the implications of this decision for both JetBlue and Spirit, as well as the broader airline industry.
