Spirit Airlines and JetBlue Officially Call Off $3.8 Billion Merger
Weeks after a federal judge blocked a merger agreement between JetBlue and Spirit Airlines, the two discount air carriers called off the deal.
“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,” JetBlue shared in a statement.
The proposed deal would have created the fifth-largest carrier in the United States. It also could have saved Spirit from potential bankruptcy.
The Merger Was Blocked By the Justice Department
In their ruling, however, the Justice Department blocked the merger, saying that the proposed deal would hurt consumers.
“The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares,” Judge William Young wrote in his decision.
JetBlue and Spirit appealed the decision days after the ruling. That appeal, however, was mandated under the terms of the merger agreement. JetBlue, meanwhile, seemed to grow cold feet.
JetBlue Seemed To Grow Uneasy
In a note to JetBlue staff, CEO Joanna Geraghty called the canceled merger “a bold and courageous plan intended to shake up the industry status quo.”
In a separate note acquired by CNBC, Geraghty admitted that acceptance by the Justice Department was unlikely.
“We were right to compete with Frontier and go for an opportunity that would have supercharged our growth and provided more opportunities for crewmembers,” she said.
“However, with the ruling from the federal court and the Department of Justice’s continued opposition, the probability of getting the green light to move forward with the merger anytime soon is extremely low.”
Trouble For Spirit
The future of Spirit, meanwhile, remains clouded. The airline’s business has fallen off since the merger with JetBlue was announced.
Now that the deal is officially dead, some are wondering if the airline will survive.
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