“We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines,” Joanna Geraghty, chief executive of JetBlue, said in a statement. “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.”
Ted Christie, Spirit’s chief executive, also cited regulatory obstacles as a key factor in his company’s decision to terminate the merger agreement, but he expressed optimism about Spirit’s future even as it faces significant financial and operational challenges.
“We are disappointed we cannot move forward with a deal that would save hundreds of millions for consumers and create a real challenger to the dominant ‘Big 4’ U.S. airlines” — United, American, Delta and Southwest, he said in a statement. “However, we remain confident in our future as a successful independent airline.”
JetBlue will pay Spirit $69 million as part of the termination agreement. Spirit stockholders received approximately $425 million in total prepayments while the merger agreement was in effect.
The two carriers had been in the midst of appealing a federal judge’s ruling in January that blocked the $3.8 billion transaction. Last week, the two sides filed a brief in their appeals case outlining why they thought the decision by U.S. District Judge William G. Young was flawed. However, JetBlue’s announcement was not a complete surprise. Shortly after Young’s decision, JetBlue executives indicated they might not appeal the case but received strong pushback from Spirit.
In his 113-page decision, Young wrote that while a combined JetBlue-Spirit carrier could put pressure on the four big airlines that dominate the industry, it would hurt consumers who rely on Spirit’s low fares. He noted that when Spirit enters a market, rival airlines reduce their prices by 7 percent to 11 percent on average.
Young’s decision was a significant victory for the Biden administration in its effort to preserve competition in a key industry that critics say has grown too concentrated.
