JetBlue and Spirit Airlines Abandon Merger Plans
JetBlue Airways and Spirit Airlines have decided to terminate their merger agreement, marking the end of a deal that faced significant challenges, including a recent federal antitrust lawsuit that ruled against the merger. The news was first reported by WSJ.
The CEOs of both airlines, JetBlue and Spirit, pointed to regulatory hurdles as the key reason for abandoning the merger. They argued that joining forces was necessary to enhance competitiveness against larger airlines dominating the U.S. market. However, a federal judge’s decision in January blocked JetBlue’s attempt to take over Spirit, expressing concerns about potential harm to cost-conscious travelers relying on Spirit’s low fares.
Following the unsuccessful appeal by JetBlue and Spirit, the termination of the $3.8 billion merger has led to notable fluctuations in stock values. Spirit shares experienced a 10% decline in morning trading, while JetBlue’s stock saw an increase of more than 2%.
The termination comes almost two years after JetBlue’s unsolicited bid for Spirit Airlines, which had previously entered a merger agreement with Frontier Airlines. JetBlue, ultimately gaining Spirit shareholder approval, aimed to position itself more competitively in the airline industry through the takeover.
Despite the merger initially receiving shareholder approval, the regulatory challenges and the federal court’s decision raised insurmountable obstacles. JetBlue acknowledged that the appeal was a requirement under the terms of the merger agreement, although analysts had anticipated a low likelihood of success.
Spirit shareholders received $425 million in prepayments from JetBlue during the agreement, and that JetBlue will pay Spirit $69 million related to the agreement’s termination.
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Sounds like Jetblue will either be sold off piecemeal once Carl Icahn buys the company and takes it private like he did with TWA. Or hopefully Jetblue will be bought up by AA or UA.