JetBlue Airways and Spirit Airlines have announced the termination of their merger agreement, which was blocked by a federal judge nearly two months ago. In separate statements, both airlines cited the inability to secure necessary legal and regulatory approvals by the merger agreement’s deadline in July of this year as the reason for terminating the deal. JetBlue CEO Joanna Geraghty expressed pride in the collaborative effort with Spirit to challenge the status quo and create a national low-fare, high-value competitor to the Big Four airlines. However, given the remaining hurdles to closing the deal, both airlines concluded that their interests are better served by moving forward independently. Spirit Airlines President and CEO Ted Christie also expressed disappointment at the deal’s inability to proceed, highlighting the potential cost savings for consumers and the creation of a strong challenger to the dominant Big 4 U.S. airlines that the merger could have facilitated.
Under the termination of the merger agreement, JetBlue will pay Spirit Airlines $69 million, and all outstanding matters related to the transaction will be mutually released.
The proposed $3.8 billion purchase of Spirit Airlines by JetBlue was blocked in mid-January after a federal judge ruled that it would diminish competition and harm consumers. The deal, which would have made JetBlue the fifth-largest airline, was deemed to violate the Clayton Act, designed to prevent anticompetitive practices.
U.S. District Judge William Young argued that the merger would substantially reduce competition and lead to higher prices for consumers, particularly those seeking low-cost options, as Spirit is the largest low-cost airline in the country.
The Department of Justice filed a lawsuit to halt the merger, with Attorney General Merrick Garland stating that it would limit choices and increase ticket prices for passengers nationwide.
Following Young’s ruling, both airlines promptly appealed the decision. JetBlue contended that the acquisition of Spirit was necessary to enhance competition with larger airlines.
The case is set to be heard by a U.S. Circuit Court of Appeals in Boston in June, signaling ongoing legal proceedings regarding the merger.