JetBlue and Spirit Airlines have agreed to terminate the $3.8 billion merger agreement they agreed to in July 2022, the carriers announced Monday. The companies “mutually agreed” to call off the merger, noting required closing conditions, including receiving necessary legal and regulatory approvals, were unlikely to be met by the merger agreement’s outside date of July 24, 2024.
Speculation that the carriers would cancel the deal began in January after a U.S. judge earlier in the month ruled against the merger in a civil lawsuit brought by the U.S. Department of Justice.
In a statement, the carriers said they still believed in what they called the “procompetitive benefits” of the airline combination.
“We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the big four airlines,” JetBlue CEO Joanna Geraghty said. “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.”
As per the terms of the agreement, JetBlue will pay Spirit $69 million, and the termination “resolved all outstanding matters related to the transaction and under which any claims between [the carriers] will be mutually released.” While the merger agreement was in effect, Spirit stockholders received approximately $425 million in total prepayments, according to Spirit, which has been taking “prudent steps to ensure the strength of its balance sheet and ongoing operations.”
Without the merger and the appeal to contend with, JetBlue is refocusing on “organic strategy and return to profitability.” During its January fourth-quarter earnings call, Geraghty noted that leisure, particularly premium leisure, would be the main audience for the $300 million worth of revenue initiatives JetBlue plans to implement in 2024.
