JetBlue calls off US$3.8b buyout of Spirit Airlines

The news: US airlines JetBlue and Spirit Airlines have terminated their USD3.8 billion ($5.83 billion) merger agreement, months after a federal judge blocked JetBlue’s attempts to take over the budget carrier on antitrust grounds.

The numbers: Under the agreement, JetBlue will pay Spirit USD69 million, in line with the deal’s termination clause. Shares in JetBlue gained 6% in premarket trading, while Spirit stock remained little changed.

The context: In the January judgment blocking the proposed merger, US District Judge William Young said that the government had proven that the merger would “would substantially lessen competition” and that Spirit is particularly important for travellers looking for cheaper flying alternatives. JetBlue appealed the decision days after it was handed down, but acknowledged that the appeal was required under the terms of the merger agreement and analysts did not expect the appeal to succeed.

What they said: Joanna Geraghty, CEO of JetBlue said: “We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines. 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.”