JetBlue and Spirit Terminate Merger Agreement

A merger agreement between JetBlue, Spirit Airlines has been called off mostly due to regulatory roadblocks.

A JetBlue Airways Airbus A320 passes a Spirit Airlines Airbus A320 as it taxis on the runway at the Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Fla., on July 7, 2022. Wilfredo Lee/AP Photo

JetBlue Airways and Spirit Airlines said on March 4 that they’re terminating their merger agreement, citing an inability to finalize closing conditions by the deadline as well as regulatory obstacles.

The companies “continue to believe in the procompetitive benefits of the combination,” but they mutually agreed to cancel the planned deal, JetBlue said in a statement.

“Terminating is the best path forward for both companies as required closing conditions, including receiving necessary legal and regulatory approvals, were unlikely to be met by the merger agreement’s outside date of July 24, 2024,” New York-based JetBlue said in its statement.

Spirit said in a statement that it had discussed options with JetBlue but ultimately concluded that regulatory roadblocks made the merger unfeasible.

‘Disappointed’

In July 2022, JetBlue struck a deal to buy Miramar, Florida-based Spirit in a transaction valued at $3.8 billion, hoping to lay the foundation of a low-fare challenger to the dominant Big Four U.S. airlines (American, Delta, United, and Southwest). The announcement of the merger agreement came mere hours after Spirit scuttled plans for a combination with fellow discount carrier Frontier Airlines.

Under the deal, JetBlue was to buy Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share that would have been payable once Spirit stockholders approved the transaction.

At the time, the two carriers said they expected the regulatory process to conclude and the transaction to close in the first half of 2024 at the latest, with the March 4 announcement ending those plans.

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

“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. We wish the very best going forward to the entire Spirit team.”

JetBlue will pay Spirit $69 million to dissolve the merger agreement, with the March 4 termination releasing any claims between the two carriers and resolving all outstanding matters between them.

Spirit CEO Ted Christie said in a statement that it’s unfortunate the deal fell through.

“We are disappointed we cannot move forward with a deal that would save hundreds of millions for consumers and create a real challenger to the dominant ‘Big 4’ U.S. airlines,” he said. “However, we remain confident in our future as a successful independent airline. We wish the JetBlue team well.”

The merger would have established the fifth-biggest airline in the United States.

For JetBlue, merging with Spirit was widely seen as a path of least resistance to acquiring Spirit’s existing planes—a fleet that would let JetBlue compete with the Big Four airlines.

The combined airline would have had a fleet of 458 aircraft and an order book of more than 300 Airbus planes. It would have had a roughly 9 percent market share, compared with about 13 percent for United Airlines (the fourth-largest carrier) and about 23 percent for Southwest, the largest carrier.

JetBlue Alliance With American Airlines Ends

In May 2023, a federal judge in Boston ruled that American Airlines and JetBlue Airways must abandon their partnership in the northeastern United States on grounds that the partnership was anti-competitive and harmed customers.

The partnership between the two air carriers was a joint venture called the Northeast Alliance. It had been approved by the Transportation Department under former President Donald Trump and took effect in early 2021.

But the Justice Department (DOJ) under President Joe Biden sued to block the joint venture, arguing that it would eliminate important competition and harm air travelers across the country.

The court ultimately sided with the DOJ, holding that by consolidating their operations in Boston and New York City, the two airlines violated Section 1 of the Sherman Act because their joint venture increased fares and reduced customer choice.

Following the decision, JetBlue announced that the Northeast Alliance had ended and instead focused its efforts on pursuing the merger with Spirit.

In December 2023, American Airlines asked an appeals court to reverse the ruling that dissolved its partnership with JetBlue.

Attorneys for American Airlines said that even though the Northeast Alliance had dissolved, the case wasn’t moot as American remains subject to a permanent injunction that limits its ability to enter into other commercial arrangements.

The injunction prohibits American and JetBlue from entering into any similar arrangements for 10 years.