Business News

JetBlue and Spirit end merger bid after antitrust objections

[ad_1]

JetBlue Airways and Spirit Airlines announced Monday that they had abandoned plans to merge in a deal that would have created the nation’s fifth-largest carrier.

In a statement, JetBlue said that while both companies still believe in the “pro-competitive benefits of the combination,” it is unlikely they will be able to obtain the necessary legal and regulatory approvals by July 24, as provided for in their agreement.

“We believed this merger was worth pursuing because it would have unleashed a low-cost, high-value domestic competitor to the big four airlines,” Joanna Geraghty, JetBlue’s chief executive, said in a statement. “We are proud of the work we have done with Spirit to define a vision to challenge the status quo, but given the obstacles that remain before conclusion, we decided together that the interests of both airlines would be best served moving forward independently. We wish the entire Spirit team the best for the future.

Ted Christie, Spirit’s chief executive, also cited regulatory hurdles as a key factor in his company’s decision to terminate the merger deal, but he expressed optimism about Spirit’s future, even if it faces significant financial and operational challenges.

“We are disappointed that we cannot move forward on an agreement that would save consumers hundreds of millions and create a real challenger to the Big 4 US airlines” – United, American, Delta and Southwest, he said. he declared in a press release. “We nevertheless remain confident in our future as a successful independent airline.”

JetBlue will pay Spirit $69 million as part of the termination agreement. Spirit shareholders received approximately $425 million in total prepayments while the merger agreement was in effect.

Judge blocks JetBlue-Spirit merger to win US antitrust efforts

The two carriers were poised to appeal a federal judge’s ruling in January that blocked the $3.8 billion deal. Last week, both sides filed an appeal brief explaining why they believed U.S. District Judge William G. Young’s ruling was wrong. However, JetBlue’s announcement wasn’t a complete surprise. Shortly after Young’s ruling, JetBlue executives indicated they would not be able to appeal the case, but received strong resistance from Spirit.

In his 113-page ruling, Young wrote that while a combined JetBlue-Spirit carrier could put pressure on the big four airlines that dominate the industry, it would hurt consumers who depend on Spirit’s low fares. He noted that when Spirit enters a market, competing airlines cut prices by 7 to 11 percent on average.

Young’s decision marks a significant victory for the Biden administration in its efforts to preserve competition in a key industry that critics say has become too concentrated.

[ad_2]

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button