On Monday, JetBlue Airways and Spirit Airlines announced they are abandoning their planned $3.8 billion merger. The decision comes after a federal judge blocked the deal last month, agreeing with the Justice Department that it would reduce competition and raise airfares.
In a memo, JetBlue CEO Joanna Geraghty called the merger “a bold and courageous plan intended to shake up the industry status quo” by accelerating JetBlue’s growth. However, she conceded that given the court’s ruling and ongoing opposition, “the probability of getting the green light to move forward with the merger anytime soon is extremely low.”
Spirit CEO Ted Christie expressed disappointment but confidence his airline can succeed independently despite recent losses. JetBlue will pay a $69 million termination fee for the failed transaction.
The Justice Department had sued to prevent the merger last year, arguing it would harm the thrifty travelers relying on Spirit’s budget offerings. In January, a federal judge in Massachusetts agreed the deal violated antitrust laws.
“Today’s decision by JetBlue is yet another victory for the Justice Department’s work on behalf of American consumers,” Attorney General Merrick Garland stated Monday. The Biden administration has fought consolidation across industries, previously forcing JetBlue to end a regional partnership with American Airlines as well.
Spirit’s board initially opposed JetBlue’s hostile takeover attempt last year, having already agreed to merge with fellow discounter Frontier Airlines. But JetBlue appealed directly to Spirit shareholders and ultimately outbid Frontier.
Both Spirit and JetBlue have struggled financially in recent years. Activist investor Carl Icahn also bought a nearly 10% stake in JetBlue recently, securing board seats and raising questions about JetBlue’s own future.
Some analysts wonder if the government may next challenge Alaska Airlines’ proposed acquisition of Hawaiian Airlines. With Spirit shares sinking 16% Monday, further airline consolidation efforts confront an uncertain regulatory climate.
The Associated Press contributed to this article.