JetBlue Airways terminates merger agreement with Spirit Airlines

Low-cost carriers JetBlue Airways and Spirit Airlines have officially called off their $3.8 billion merger agreement on Monday, acknowledging the absence of a viable path forward following a federal judge’s intervention in January over anti-competitive concerns.

The proposed merger, which aimed to forge the fifth-largest carrier in the United States and bolster Spirit’s financial stability, faced mounting challenges since a Boston judge cast doubt on its benefits to consumers due to potential competition reduction.

JetBlue CEO Joanna Geraghty conveyed the sobering reality to employees via an internal memo obtained by Reuters, stating, “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.”

Geraghty stressed on the slim prospects of regulatory approval, especially given the looming July 24 deadline, even in the event of a successful appeal to overturn the initial ruling.

For Spirit Airlines, the termination of the deal casts a shadow over its future trajectory. The ultra-low-cost carrier has been grappling with subdued demand in its core markets as it endeavours to regain sustainable profitability. Concerns over its financial resilience have even led some analysts to speculate about potential bankruptcy if the company fails to fortify its financial position.

In premarket trading, Spirit’s shares experienced a notable 14 per cent decline, while JetBlue’s shares surged by as much as 7 per cent, reflecting investor sentiment in response to the news.