OAN’s James Meyers
9:28 AM -Monday, March 4, 2024
Low-cost carriers JetBlue and Spirit Airlines agreed to terminate their $3.8 billion merger agreement on Monday, weeks after a federal judge blocked the deal on anti-competition hurdles.
Both airlines stated on Monday that the decision “is the best path forward” since the companies likely would not be able to meet closing conditions, which included receiving legal and regulatory approvals by the deal’s July 2024 deadline.
“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,” said JetBlue CEO Joanna Geraghty.
A successful deal would have made it the fifth-largest carrier in the United States and paved the way for Spirit to survive.
“Although both companies continue to believe in the procompetitive benefits of the combination, JetBlue and Spirit mutually agreed that terminating is the best path forward for both companies,” JetBlue shared in a statement on its website.
Spirit CEO Ted Christie also argued that the deal “would save hundreds for millions for consumers and create a real challenger to the dominant ‘Big 4’ U.S. airlines.”
However, there were major doubts related to how JetBlue would be able to take on Spirit after the Justice Department sued to stop the deal last year, arguing it would have reduced the availability of low-priced air tickets.
Additionally, from December 2022 to November 2023, Delta, United, American, and Southwest account for 80% of the domestic market share, according to the most recent data from the Transportation Department.
Attorney General Merrick Garland commented on the latest canceled deal, saying this is a “victory for the Justice Department’s work on behalf of American consumers.”
“The Justice Department proved in court that a merger between JetBlue and Spirit would have caused tens of millions of travelers to face higher fares and fewer choices,” he added. “We will continue to vigorously enforce the nation’s antitrust laws.”
Meanwhile, Spirit’s chief financial officer Scott Haralson said earlier this month that the carrier was looking into “right-sizing” its labor costs, adding to the uneasiness.
Spirit has also said it will be looking at other options to refinance its 2025 debt maturities, including the $1.1 billion debt that was due.
After the agreement with JetBlue in July 2022, Spirit’s business has significantly decreased, with experts unsure of how Spirit will stay afloat.
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