Low-cost airlines JetBlue and Spirit halted their $3.8 billion merger plan on Monday, weeks after a federal judge blocked the merger citing anticompetitive concerns.
A successful deal would have created the fifth largest airline in the United States and ensured Spirit’s survival.
“While both companies continue to believe in the pro-competitive benefits of a merger, JetBlue and Spirit have mutually agreed that termination is the best path forward for both companies,” JetBlue said in a statement. statement on its website.
JetBlue’s ability to buy low-cost carrier Spirit has been in question since the Justice Department filed a lawsuit last year seeking to block the deal, saying it would reduce the availability of cheap flights.
In January, U.S. District Judge William Young agreed and blocked the deal, saying it would harm price-conscious travelers.
“Spirit’s elimination will harm cost-conscious travelers who rely on Spirit’s low fares,” Young wrote in his decision.
JetBlue and Spirit appealed the move days later, with JetBlue noting that the appeal was necessary under the terms of the merger agreement.
JetBlue CEO Joanna Geraghty called the ill-fated deal “a bold and courageous plan designed to shake up the industry status quo” in a memo to staff Monday obtained by the Post. I called it.
“We were right to target an opportunity that could compete with Frontier, accelerate our growth and provide more opportunities for our crews,” Geraghty added in a previously reported note. . CNBC.
“However, given the federal court ruling and the Department of Justice’s continued opposition, it is highly unlikely that we will get the green light to proceed with the merger anytime soon.”
Spirit pilots were reportedly already anticipating the end of their contracts and had been looking for other opportunities since Young’s ruling.
Separately, Spirit Chief Financial Officer Scott Haralson added to concerns earlier this month when he said the Florida-based airline was considering “right-sizing” its labor costs.
The bleak outlook comes as the airline struggles to turn a profit due to rising operating costs and supply chain issues, raising questions about its ability to repay debt maturing next year.
Spirit recently announced that it is considering options to refinance its 2025 debt maturities, including $1.1 billion of debt maturing in 2025.
Spirit’s performance has deteriorated significantly since it agreed to a partnership with JetBlue in July 2022. Now that the $3.8 billion merger is gone, analysts aren’t sure whether Spirit will survive.
Some analysts have suggested that the company could face bankruptcy if it cannot strengthen its finances. S&P Global, Moody’s and Fitch all downgraded the company’s credit ratings after Young’s ruling last month, citing increased default and refinancing risks.
The Post has reached out to JetBlue and Spirit for comment.
