JetBlue and Spirit Airlines ended plans to merge for $3.8 billion after a court barred them.
JetBlue announced Monday that while both companies still believe in the benefits of a combination, they feel they likely will not meet the requirements to close the deal by the July 24 deadline and mutually agreed that abandoning the pact was the best decision for both. .
“We are proud of the work we did with Spirit to present a vision that challenges the status quo, but given the obstacles we continue to face, we decided together that we will best serve the interests of both airlines if we move forward independently,” the company said in a statement. JetBlue CEO Joanna Geraghty.
For his part, Ted Christie, CEO of Spirit, expressed in his own statement that “we are disappointed that we were not able to finalize an agreement that would save hundreds of millions of dollars for consumers and that would have created a rival to the dominance of the big four airlines in USA. However, we remain confident in our future as a successful independent airline.”
JetBlue will pay Spirit $69 million as a termination fee.
The Justice Department had sued to block the merger last year, saying it would inhibit competition and raise prices, especially for travelers who rely on cheap Spirit tickets.
In January, a federal judge in Boston sided with the government and blocked the deal, saying it violates antitrust laws.
The airlines had appealed the ruling, and a hearing for that appeal had been scheduled for June.
New York-based JetBlue had argued that the merger would help it better compete with large airlines. But there were continuing losses and other problems at Spirit, which is based in Miramar, Florida. Last week JetBlue warned it could abandon the deal.
Shares of JetBlue Airways Corp rose more than 5% in pre-market trading, while Spirit’s shares fell more than 13%.
Source: With information from AP.
