JetBlue, Spirit ditch $3.8 billion budget airline deal

Mar 04, 2024

Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), William Jackson (Producer), Emma Stoltzfus (Video Editor)

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JetBlue Airways and Spirit Airlines announced the termination of their proposed $3.8 billion merger, a development nearly two years in the making. The decision follows a federal court’s move to block the merger, siding with the government’s antitrust lawsuit that argued the deal would reduce competition and eliminate Spirit as a low-cost travel option.

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The U.S. Justice Department maintained that the merger would significantly cut down competition in the airline industry. Spirit Airlines’ CEO, Ted Christie, expressed disappointment over the inability to proceed with the merger.

“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,” Christie said. “However, we remain confident in our future as a successful independent airline. We wish the JetBlue team well.”

https://twitter.com/verge/status/1764679559847276942

Joanna Geraghty, CEO of JetBlue Airways, echoed a similar sentiment, emphasizing the decision to move forward independently after evaluating the remaining hurdles to closing the deal.

“Given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently,” Geraghty said.

Financial uncertainties loom for both airlines in the wake of this terminated agreement. JetBlue reported a loss for the year ending 2023 and anticipates continued declines in early 2024.

Spirit faces even greater challenges, with analysts speculating about potential bankruptcy — a narrative firmly rejected by CEO Ted Christie. With $1.1 billion in debt due in 2025, Spirit plans to explore refinancing options, reinforcing its stance on operating as a standalone entity throughout the merger discussions.

As part of dissolving the merger agreement, JetBlue will compensate Spirit $69 million. This comes after JetBlue’s previous payments to Spirit shareholders, totaling about $425 million in prepayments while the merger agreement was active.

Tags: Airlines, Bankruptcy, JetBlue, U.S. Department of Justice

SIMONE DEL ROSARIO
THIS DEAL IS OFFICIALLY GROUNDED FOR GOOD.

JETBLUE AND SPIRIT AIRLINES ARE SCRAPPING THE 3-POINT-8 BILLION DOLLAR MERGER AFTER NEARLY TWO YEARS. THE BREAKDOWN COMES WEEKS AFTER A FEDERAL COURT BLOCKED THE DEAL, SIDING WITH THE GOVERNMENT IN THE ANTITRUST CASE.

THE JUSTICE DEPARTMENT HAD ARGUED THE DEAL WOULD CUT COMPETITION AND ELIMINATE SPIRIT AS A BUDGET-FRIENDLY OPTION FOR TRAVELERS.

SPIRIT CEO TED CHRISTIE SAID,

TED CHRISTIE
PRESIDENT, CEO | SPIRIT AIRLINES

“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. However, we remain confident in our future as a successful independent airline. We wish the JetBlue team well.”

JOANNA GERAGHTY
CEO | JETBLUE AIRWAYS

JETBLUE CEO JOANNA GERAGHTY SAID, “…given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently.

SIMONE DEL ROSARIO

INDEPENDENTLY, BOTH AIRLINES FACE FINANCIAL UNCERTAINTY. JETBLUE CLOSED OUT 2023 WITH A LOSS AND EXPECTS DECLINES TO CONTINUE IN EARLY 2024. SPIRIT IS FACING EVEN BIGGER PROBLEMS, WITH SOME ANALYSTS FLOATING BANKRUPTCY, A NOTION THE SPIRIT CEO HAS SHOT DOWN AS A MISGUIDED NARRATIVE.

SPIRIT HAS $1.1 BILLION IN DEBT DUE IN 2025. CHRISTIE SAYS THE COMPANY WILL EXPLORE REFINANCING OPTIONS AND HAS ALWAYS CONTINUED TO CONSIDER THE POSSIBILITY OF OPERATING AS A STANDALONE AIRLINE THROUGH THIS TWO-YEAR SAGA.

JETBLUE WILL PAY SPIRIT $69 MILLION TO SCRAP THE MERGER. WHILE THE AGREEMENT WAS ACTIVE, JETBLUE PAID SPIRIT SHAREHOLDERS ABOUT $425 MILLION IN PREPAYMENTS.