Low-cost air carriers JetBlue Airways and Spirit Airlines canceled their $3.8bn merger agreement on Monday, seeing no path forward after a US judge blocked the deal in January on anti-competition concerns.
A successful deal would have created the fifth-largest carrier in the United States and helped Spirit ensure its survival, but the deal had been on the ropes ever since a Boston judge said it would harm consumers by reducing competition.
“With the ruling from the federal court and the Department of Justice’s continued opposition, the probability of getting the green light to move forward with the merger anytime soon is extremely low,” JetBlue’s CEO, Joanna Geraghty, told employees in an internal note seen by Reuters.
“Even if the ruling was overturned on appeal, we simply don’t see a path to regulatory approval by the required July 24 deadline.”
Without the deal, Spirit faces a rough road ahead. The ultra-low-cost carrier has grappled with weak demand in its key markets as it seeks to return to sustainable profitability. Some analysts have even suggested the company could face bankruptcy if it cannot shore up finances
Its shares fell 14% in pre-market trading, while JetBlue shares rose as much as 7%.
The decision is a victory for the Biden administration’s efforts to lower costs for consumers. The administration has used antitrust action and other enforcement efforts to try to bring down prices for US residents across several industries.
The ruling by William Young, the US district judge, found the proposed deal was likely to hurt competition in the US aviation market and could harm ticket prices.
