April 23, 2024

JetBlue and Spirit call off merger

JetBlue and Spirit Airlines have terminated their planned $3.8billion merger due to issues with regulatory approvals.

The pair have been in discussions since July 2022 but decided they would not be able to meet the conditions set by a Boston judge in January who ruled that merger would violate antitrust laws and drive up fares.

The collapse of the deal immediately raised questions about the future of Spirit, which has not turned profit since 2019.

Its shares fell 14% in pre-market trading, while JetBlue shares rose as much as 7%.

“We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines,” said Joanna Geraghty, CEO JetBlue.

“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.”

Under the agreement, JetBlue will pay Spirit $69 million and the termination resolves all outstanding matters related to the transaction and under which any claims between them will be mutually released.

“JetBlue has a strong organic plan and unique competitive advantages, including a beloved brand, a unique value proposition, and high-value geographies,” Geraghty continued.

“We have already begun to advance our plan to restore profitability. We look forward to sharing more on our progress in the coming months.”

JetBlue said it has identified multiple near-term revenue initiatives for 2024, including “increased distribution and partnerships, expanded loyalty programme functionality, network initiatives, and ancillary initiatives, which will deliver over $300 million in revenue benefits”.

JetBlue also remains on track to deliver $175-200 million in cost savings from its structural cost programme and $75 million in maintenance savings from its fleet modernisation, positioning the company to approach breakeven operating margins in 2024.

jetblue.com

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