JetBlue Airways Corp. said: And Spirit Airlines Inc. On Monday, they reached an agreement to terminate the merger agreement concluded between them in July 2022, which led to the former’s shares rising by 6% in early trading.
“Although both companies continue to believe in the competitive advantages of this combination, JetBlue JBLU,
And save the soul,
“It was mutually agreed that termination is the best path forward for both companies as the required closing conditions, including obtaining the necessary legal and regulatory approvals, are unlikely to be met by the merger agreement's external deadline of 24,” JetBlue said in a statement. July 2024.”
JetBlue CEO Joanna Geraghty said the two companies believed their merger would have created a low-cost, high-value national competitor to the Big Four airlines.
But in January, the deal was put in jeopardy when the court sided with the Justice Department in saying that a merger between low-cost JetBlue and ultra-low-cost Spirit would hurt competition. The companies appealed the ruling.
See also: JetBlue is still evaluating Spirit merger options, stock declines after earnings
JetBlue will now pay Spirit a $69 million separation fee to release all claims between the two companies.
“JetBlue has a strong membership plan and unique competitive advantages, including a beloved brand, unique value proposition and high-value geographies,” Geraghty said in a statement.
The company will focus its efforts to return to profitability, refocusing on core strengths while reducing costs. The airline is on track to realize cost savings of between $175 million and $200 million from its structural cost program and $75 million in maintenance savings from modernizing its fleet, as well as additional savings from other core reductions in fixed costs. This is expected to put it on track to approach break-even operating margins in 2024.
JetBlue plans to host an investor day on May 30.
For her part, Spirit said she has always considered the possibility of having to go it alone and is evaluating her next steps.
“The company has taken and will continue to take prudent steps to ensure the strength of its balance sheet and ongoing operations, including evaluating options to refinance upcoming debt maturities,” it said in a separate statement.
Spirit stock was down 12% early Monday and is down 64% over the past 12 months, while the S&P 500 SPX is up 27%.
