JetBlue and Spirit Airlines formally pulled the plug Monday on their merger, about six weeks after a federal judge ruled it violated US antitrust law.
The companies had positioned JetBlue’s $3.8 billion purchase of Spirit as beneficial to consumers, but a federal judge in January sided with the US Justice Department, which had argued that the removal of the no-frills Spirit would lead to higher fares.
The companies took the decision after concluding that, given the legal situation, they were unlikely to meet the merger’s deadline of July 24, 2024.
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 said it has enlisted Perella Weinberg & Partners and Davis Polk & Wardwell to advise it on efforts to refinance debt in order to reduce debt payments.
Shares of Spirit slumped 9.3 percent in early trading Monday, while JetBlue rose 3.0 percent.
