DALLAS — JetBlue Airways (B6) and Spirit Airlines (NK) have announced that they are ending their agreement to merge. This decision comes after they lost a federal antitrust lawsuit challenging the deal. The Justice Department (DOJ) sued to block the merger, arguing that it would stifle competition in the airline industry and eliminate Spirit as a discount alternative for price-conscious travelers.

While the airlines say they still recognize the positive effects of the merger, they decided to end their agreement because it was unlikely that the legal and regulatory approvals required for the merger would be obtained by the specified closing date of July 24, 2024.

“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 Joanna Geraghty, chief executive officer, JetBlue. “We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently. We wish the very best going forward to the entire Spirit team.”

Under the agreement, B6 will pay NK US$69 million, with the termination resolving all outstanding matters related to the transaction.

JetBlue and Spirit tails at FLL. Photo: Helwing Villamizar/Airways
JetBlue and Spirit tails at FLL. Photo: Helwing Villamizar/Airways

Their Separate Ways

In January, a federal judge blocked B6’s attempted takeover of NK after the DOJ’s lawsuit. The judge agreed with the DOJ’s argument that the acquisition would harm competition and limit the availability of low-priced tickets. The airlines appealed the judge’s decision, but the chances of a successful appeal were low.

Following the news of the merger termination, NK’s shares tumbles 17% in premarket trading, while B6’s shares are up approximately 4%, as the termination of the merger allowes the latter to shift its focus towards implementing an organic strategy and achieving profitability.

Geraghty can now prioritize several revenue initiatives for 2024, including enhanced distribution and partnerships, improved loyalty program functionality, network expansion, and ancillary initiatives. As per B6’s press release, these efforts are expected to generate over US$300 million in revenue benefits.

Additionally, B6 is set to achieve US$175-200 million in cost savings through its structural cost program and US$75 million in savings from fleet modernization in maintenance. As for, NK, its near furure does not look so bright, but that’s for another post.

Featured image: N712JB JetBlue Airlines Airbus A320 FLL KFLL combo with Spirit Airlines N672NK A321. Photo: Alexander Schraff/Airways

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Article source: https://airwaysmag.com/jetblue-spirit-terminate-merger/

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