Low-cost carriers JetBlue and Spirit called off their proposed $3.8 billion merger on Monday — weeks after a federal judge blocked the deal on anti-competition concerns.
A successful deal would have created the fifth-largest carrier in the USA and helped Spirit ensure its survival.
“Although each firms proceed to imagine within the procompetitive advantages of the mix, JetBlue and Spirit mutually agreed that terminating is the most effective path forward for each firms,” JetBlue shared in a statement on its website.
JetBlue and Spirit said Monday that they’re calling off their proposed $3.8 billion merger agreement. Before calling off the deal, a federal judge blocked the acquisition in January and the airlines appealed the choice. AP
There have been doubts that JetBlue would have the ability to take over budget carrier Spirit for the reason that Justice Department sued to stop the deal last yr, arguing it might have reduced the provision of low-priced air tickets.
In January, US District Court Judge William Young agreed, and blocked the deal, which he added would hurt price-conscious travelers.
“The elimination of Spirit would harm cost-conscious travelers who depend on Spirit’s low fares,” Young wrote in his decision.
JetBlue and Spirit appealed the move days later, but JetBlue noted that the appeal was required under the terms of the merger agreement.
JetBlue CEO Joanna Geraghty called the ill-fated deal “a daring and courageous plan intended to shake up the industry establishment” in a note sent to staff on Monday obtained by The Post.
JetBlue CEO Joanna Geraghty said in a note to staffers on Monday that “the probability of getting the green light to maneuver forward with the merger anytime soon is amazingly low.” REUTERS
“We were right to compete with Frontier and go for a chance that might have supercharged our growth and provided more opportunities for crewmembers,” Geraghty added within the note earlier reported on by CNBC.
“Nevertheless, with the ruling from the federal court and the Department of Justice’s continued opposition, the probability of getting the green light to maneuver forward with the merger anytime soon is amazingly low.”
Spirit pilots were already anticipating the termination of the deal, and reportedly have been scouring for other opportunities ever since Young’s ruling.
Individually, Spirit Chief Financial Officer Scott Haralson said earlier this month that the Florida-based carrier was looking into “right sizing” its labor costs, adding to the uneasiness.
The gloomy outlook comes because the airline has struggled to post a profit as a result of increased operating costs and provide chain issues, raising doubts about its ability to pay down debt as a result of mature next yr.
Budget-carrier Spirit has struggled to post a profit as a result of increased operating costs and provide chain issues. REUTERS
Spirit has recenly said that it was assessing options to refinance its 2025 debt maturities, including $1.1 billion debt that was due.
Spirit’s business has deteriorated significantly because it agreed on the tie-up with JetBlue in July 2022. Now that the $3.8 billion merger has died, analysts are undecided about Spirit’s ability to survive.
Some analysts have suggested that the corporate could face bankruptcy if it cannot shore up its funds. S&P Global, Moody’s and Fitch all downgraded the airline’s credit rankings after Young’s rulinglast month, citing higher default and refinancing risks.
The Post has sought comment from JetBlue and Spirit.