JetBlue Airways and Spirit Airlines have called off their $3.8 billion merger agreement following a defeat in a federal antitrust lawsuit.
A federal judge ruled in favor of the Justice Department’s argument the merger would negatively impact budget-conscious travelers by eliminating Spirit’s low-fare options.
Both airlines argued the merger was essential to effectively compete against the dominant players in the US aviation market.
Despite initially appealing the judge’s decision, JetBlue acknowledged the appeal was a formality required by the merger agreement, with little expectation of overturning the verdict.
The dissolution of the merger was welcomed by the Justice Department, highlighting the government’s commitment to protecting consumer interests.
Following the announcement, Spirit’s stock experienced a steep drop, while JetBlue’s shares saw an uptick.
The attempted merger had been part of JetBlue’s strategy to expand its footprint and compete more aggressively with larger airlines.
The deal’s termination marks a continuation of challenges for JetBlue.
The airline has been focusing on reversing losses and improving operational efficiency under new CEO Joanna Geraghty.
JetBlue faces additional pressures, including activist investor Carl Icahn’s involvement and the need to address strategic partnerships.
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The Justice Department also deemed its previous coordination with American Airlines in the Northeast anti-competitive.
Meanwhile, Spirit Airlines must now navigate its path forward independently, dealing with its financial challenges and operational issues, including grounding planes due to engine defects.
Despite these hurdles, Spirit remains optimistic about its standalone prospects, citing initiatives to boost profitability and enhance customer experiences.
Spirit will receive compensation from JetBlue as part of the merger termination, adding a financial cushion as it works toward recovery.
