JetBlue, Spirit Airlines agree to terminate $3.8bn merger agreement

4th Mar 2024 13:40

(Sharecast News) - JetBlue and Spirit Airlines said on Monday that they have agreed to terminate their $3.8bn merger due to regulatory challenges.

In January, a federal judge blocked JetBlue's acquisition of Spirit after the Justice Department sued to stop the merger, saying the deal would drive up fares for price-sensitive consumers by taking the discount carrier out of the market.

US District Court Judge William Young said: "JetBlue plans to convert Spirit's planes to the JetBlue layout and charge JetBlue's higher average fares to its customers.

"The elimination of Spirit would harm cost-conscious travellers who rely on Spirit's low fares."

Spirit president and chief executive Ted Christie said: "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.

"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. However, we remain confident in our future as a successful independent airline. We wish the JetBlue team well."

JetBlue chief executive Joanna Geraghty said: "We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines.

"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. We wish the very best going forward to the entire Spirit team."

Under the agreement, JetBlue will pay Spirit a $69m termination fee.