NEW YORK (AP) – JetBlue Airways warned that it may end its bid to acquire low-cost carrier Spirit Airlines as soon as this weekend after a United States (US) federal judge blocked the deal, sending Spirit shares sharply lower on Friday.
Spirit shot back that it finds no reason to terminate the deal and will continue to meet its obligations, “and it expects JetBlue to do the same”.
A federal judge sided with the Justice Department and blocked JetBlue’s proposed USD3.8 billion purchase of Spirit last week. The Justice Department sued to block the merger, saying it would drive up fares by eliminating Spirit, the nation’s biggest low-cost airline.
Both airlines have filed their intention to appeal with a higher court.
JetBlue said in a regulatory filing on Friday it told Spirit that certain conditions of their deal might not be met by the deadline set in the airlines’ 2022 agreement. JetBlue said that could lead it to terminate the deal as early as today.
Spirit responded hours later with its own filing that disputed JetBlue’s position.
“Spirit believes there is no basis for terminating the Merger Agreement,” Spirit wrote. “Spirit will continue to abide by all of its obligations under the Merger Agreement, and it expects JetBlue to do the same.”
Shares of Spirit Airlines Inc, based in Miramar, Florida, fell 13.4 per cent during Friday’s session, while JetBlue Airways Corp gained 3.6 per cent.
JetBlue, based in New York, had argued that it needed to buy Spirit to grow quickly and better compete against bigger rivals that dominate the US air-travel market. Together, the two carriers would control about 10 per cent of the domestic air-travel market, still smaller than American, Delta, United and Southwest.
Both JetBlue and Spirit have struggled financially and have been slower than some other airlines to recover from the pandemic. Since the start of 2020, JetBlue has lost USD2.1 billion, and Spirit has lost USD1.7 billion.
