JetBlue will pay Spirit $69 million as a termination fee.
New York, USA:
JetBlue Airways and Spirit Airlines formally terminated their merger on Monday, about six weeks after a federal judge ruled that the airlines violated U.S. antitrust laws.
The two companies viewed JetBlue Airways’ $3.8 billion acquisition of Spirit as a benefit to consumers, but a federal judge in January sided with the U.S. Justice Department, arguing that canceling low-cost Spirit flights would lead to higher fares.
The companies concluded that, given the legal situation, it was unlikely that they would make the decision before the merger deadline of July 24, 2024.
JetBlue will pay Spirit $69 million as a termination fee.
JetBlue CEO Joanna Geraghty said: “We believe this merger is worth pursuing because it will create a national low-fare, high-value competitor for the four major airlines. .”
“Given the remaining hurdles to closure, we mutually decided that the interests of both airlines would be better served by moving forward independently.”
Geraghty added that JetBlue has a “strong organic plan” that includes cutting costs and expanding its loyalty program.
Spirit CEO Ted Christie said in a company statement that he is “confident in our future as a successful independent airline.”
Christie added: “After discussing our options with our advisors and JetBlue, we have concluded that current regulatory obstacles do not allow us to complete this transaction in a timely manner in accordance with the merger agreement.”
“We are disappointed that we were unable to move forward with a deal that would have saved consumers hundreds of millions of dollars and created a real challenge for the dominant U.S. ‘Big Four’ airlines,” he said.
Spirit said it has hired Perella Weinberg & Partners and Davis Polk & Wardwell to advise on its debt refinancing efforts to reduce debt payments.
Spirit Airlines shares fell 9.3% in early trading on Monday, while JetBlue Airways rose 3.0%.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
