JetBlue and Spirit Airlines announced on Monday that they are abandoning their merger bid after concluding that they won’t be able to win regulatory approvals in time for the July 2024 deadline stipulated in the merger agreement.
New York-based JetBlue made a surprise bid for Spirit in April 2022, going head to head with Frontier Airlines and ultimately prevailing in winning the backing of shareholders by agreeing to pay $33 per share in Spirit.
The merger faced fierce opposition from the Biden administration and the Justice Department launched a legal bid to block the deal, arguing it would it be bad for competition.
In January, a federal judge sided with the Justice Department after concluding the merger would drive up airfares and make air travel less accessible for some of the poorest Americans.
JetBlue and Spirit had been weighing up a legal appeal but on Monday, the two carriers said in a separate statements that they would now abandon the merger deal altogether.
“Although both companies continue to believe in the procompetitive benefits of the combination, JetBlue and Spirit mutually agreed that terminating is the best path forward for both companies as required closing conditions, including receiving necessary legal and regulatory approvals, were unlikely to be met by the merger agreement’s outside date of July 24, 2024,” JetBlue said in a statement.
“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,” commented JetBlue’s new CEO Joanna Geraghty.
“We wish the very best going forward to the entire Spirit team,” Geraghty continued.
Under the merger agreement’s terms, JetBlue must now pay Spirit $69 million to terminate the deal.
Spirit CEO Ted Christie said the carrier had “always considered the possibility of continuing to operate as a standalone business and have been evaluating and implementing several initiatives that will enable us to bolster profitability”.
Both JetBlue and Spirit have been struggling financially in recent years and the decision to abandon the merger will be seen as a massive blow for the two airlines.
Last month, activist Investor Carl Icahn acquired a 10% stake in JetBlue and as secured a board seat, raising fears that he might do to JetBlue what he did to TWA in the 1980s and 1990s.
Ichan was accused of ‘asset stripping’ TWA in order to repay investors the money he borrowed to buy the airline. In 1992, TWA was forced into Chapter 11 bankruptcy protection and the airline was eventually acquired by American Airlines in early 2001.
