JetBlue and Spirit Airlines Monday announced they are terminating their July 2022 merger agreement.
“Although both companies continue to believe in the procompetitive benefits of the combination, JetBlue and Spirit mutually agreed that 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,” JetBlue said in a statement.
The merger was troubled from the start. Spirit’s future, in early 2022, initially looked to be in the hands of Frontier Airlines, which had submitted a proposal to merge with the carrier. Months later, JetBlue submitted its own proposal to acquire Spirit ahead of its official merger with Frontier. While the board of directors for Spirit favored the deal with Frontier at the time, they eventually came around to agree to terms with JetBlue. That agreement would see JetBlue acquire Spirit for $33.50 per share in cash, an aggregate fully diluted equity value of $3.8 billion and an adjusted enterprise value of $7.6 billion.
In both instances, Spirit was looking to create a national low-fare competitor to the U.S.’s “Big Four” airlines. However, Ted Christie, Spirit's president and CEO, following the termination agreement, said, “Throughout the transaction process, given the regulatory uncertainty, we have always considered the possibility of continuing to operate as a standalone business and have been evaluating and implementing several initiatives that will enable us to bolster profitability and elevate the guest experience.”
Under this latest agreement, JetBlue will pay Spirit $69 million and the termination resolves all outstanding matters related to the transaction and under which any claims between them will be mutually released.
This is the second alliance that has fallen apart on JetBlue’s front. In mid-2023, the carrier and American Airlines terminated their “Northeast Alliance.” The “de facto merger” (so named by the U.S. Department of Justice) saw the airlines share revenue while allowing each to maintain its presence in cities where they had established operations. A federal judge ruled this alliance must end.
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