Jan. 26 (UPI) — Shares of Spirit Airlines continued to slide, dropping more than 15% Friday morning after JetBlue Airways signaled it might walk away from a proposed buyout of the ultra-low-cost carrier.
JetBlue warned “certain closing conditions” necessary for the merger to proceed “may not be satisfied” before a required deadline, the Long Island-based discount airline wrote in a filing with the U.S. Securities and Exchange Commission.
“Accordingly the Merger Agreement may be terminable on and after January 28, 2024.”
Florida-based Spirit saw its shares plunge by $1.17 or 16.27% to $6.05 as of 10:54 a.m. EST.
JetBlue shares were up $0.07 or 1.3% to $5.41 at the same time.
“Spirit believes there is no basis for terminating the merger agreement. Spirit will continue to abide by all of its obligations under the merger agreement, and it expects JetBlue to do the same,” the company wrote in a separate filing with the SEC.
The news comes 10 days after a federal judge blocked JetBlue’s purchase of its rival, calling anti-competitive.
Spirit shares began falling at that point, hitting a then-low of $5.70 on Jan. 18 after the court ruling. The company’s stock has fallen 62.2% over the last three months.
The proposed takeover has a purchase price valued at approximately $3.8 billion.
If successful, the deal would create the fifth-largest airline in the United States, behind American Airlines, Delta, Southwest and United.
Terminating the merger over a lack of regulatory approval would come with a financial penalty. In that case, JetBlue would need to pay Spirit $70 million. The company would also owe Spirit stockholders more than $400 million, less some costs.
In July, JetBlue and American Airlines announced they were winding down a partnership between the two to avoid antitrust claims by the Justice Department.
