Low-cost carriers JetBlue and Spirit called off their proposed $3.8 billion merger on Monday — weeks after a federal judge blocked the deal on anti-competition concerns.
A successful deal would have created the fifth-largest carrier in the United States and helped Spirit ensure its survival.
“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 on its website.
There have been doubts that JetBlue would be able to take over budget carrier Spirit since the Justice Department sued to stop the deal last year, arguing it would have reduced the availability of low-priced air tickets.
In January, US District Court Judge William Young agreed, and blocked the deal, which he added would hurt price-conscious travelers.
“The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares,” Young wrote in his decision.
JetBlue and Spirit appealed the move days later, but JetBlue noted that the appeal was required under the terms of the merger agreement.
JetBlue CEO Joanna Geraghty called the ill-fated deal “a bold and courageous plan intended to shake up the industry status quo” in a note sent to staff on Monday obtained by The Post.
“We were right to compete with Frontier and go for an opportunity that would have supercharged our growth and provided more opportunities for crewmembers,” Geraghty added in the note earlier reported on by CNBC.
“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.”
Spirit pilots were already anticipating the termination of the deal, and reportedly have been scouring for other opportunities ever since Young’s ruling.
Separately, Spirit Chief Financial Officer Scott Haralson said earlier this month that the Florida-based carrier was looking into “right sizing” its labor costs, adding to the uneasiness.
The gloomy outlook comes as the airline has struggled to post a profit due to increased operating costs and supply chain issues, raising doubts about its ability to pay down debt due to mature next year.
Spirit has recenly said that it was assessing options to refinance its 2025 debt maturities, including $1.1 billion debt that was due.
Spirit’s business has deteriorated significantly since it agreed on the tie-up with JetBlue in July 2022. Now that the $3.8 billion merger has died, analysts are not sure about Spirit’s ability to survive.
Some analysts have suggested that the company could face bankruptcy if it cannot shore up its finances. S&P Global, Moody’s and Fitch all downgraded the airline’s credit ratings after Young’s rulinglast month, citing higher default and refinancing risks.
The Post has sought comment from JetBlue and Spirit.
