JetBlue calls off merger with Spirit Airlines
JetBlue Airways on Monday announced that it is abandoning its bid to purchase Spirit Airlines, after a judge blocked its plans to merge earlier this year.
New York-based JetBlue said that while both companies still believe the merger would benefit passengers by creating an airline that can compete with other larger carriers, ultimately the airline bowed to what has become intractable legal and regulatory approval hurdles, especially considering the Biden administration's muscular stance against consolidation.
“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, JetBlue’s chief executive officer. “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.”
American Airlines, Delta Air Lines, United Airlines and Southwest Airlines control roughly 80 percent of the domestic market.
In a statement, Attorney General Merrick Garland called the decision "a victory" for the "Justice Department’s work on behalf of American consumers." The merger, Garland said, "would have caused tens of millions of travelers to face higher fares and fewer choices."
JetBlue will pay Spirit $69 million to terminate the deal. Spirit Airlines’ CEO Ted Christie on Monday said the company is “disappointed” it couldn’t move forward on a deal that would have created a “real challenger to the dominant” airlines.
In a major win for the Biden administration — which has sought a string of actions intended to improve competition among airlines — U.S. District Judge William Young in Boston blocked JetBlue's proposed $3.8 billion purchase of Spirit in January, arguing that customers who rely on Spirit’s bargain prices would be negatively affected by a merger.
JetBlue and Florida-based Spirit said they disagreed with the ruling, and just last week, the two airlines filed their appeal urging the appeals court to overturn a Young’s ruling this year to block their prospective merger.
The airlines argued that the initial ruling favored a small subset of Spirit customers “that it hypothesized ‘must rely’ on Spirit for air travel because they cannot ‘afford’ another airline,” but the outcome overall “ignored the vast majority of air travelers” that would benefit from a new airline.
That said, following the trial, JetBlue hinted it could possibly terminate the merger deal.
Antitrust enforcement advocates praised Young's initial decision. William McGee, a senior fellow for aviation and travel at the American Economic Liberties Project, at the time said the ruling is “an enormous victory for travelers, workers and local communities” and said “airline executives and Wall Street are now on notice.”
In 2022, budget airlines Spirit and Colorado-based Frontier Airlines first announced their intent to merge — a deal valued at $6.6 billion. JetBlue's proposal eventually forced Spirit to abandon those plans.
