About six weeks after a federal judge determined that the merger violated US antitrust law, JetBlue and Spirit Airlines officially called it quits on Monday.
The companies claimed that customers would benefit from JetBlue’s $3.8 billion acquisition of Spirit, but in January, a federal judge sided with the US Justice Department, which maintained that higher fares would result from the elimination of the basic Spirit.
The companies made the choice after determining that they were unlikely to complete the merger by the July 24, 2024, deadline given the current state of the law.
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.”
Geraghty added that JetBlue has a “strong organic plan” involving cost cuts and an expanded loyalty program.
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,” Christie added.
“We are disappointed we cannot move forward with a deal that would save hundreds of millions for consumers and create a real challenger to the dominant ‘Big 4’ US airlines,” he said.
Spirit announced that it has hired Davis Polk & Wardwell and Perella Weinberg & Partners to provide it with advice on debt refinancing options that would lower debt payments.
In early trading on Monday, Spirit’s shares fell 9.3 percent, while JetBlue’s shares increased 3.0 percent.
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