JetBlue and Spirit call off their $3.8b merger

JetBlue Airways and Spirit Airlines announced on Monday that they would not seek to overturn a court ruling that blocked their planned $3.8b merger. The decision is a big win for the Biden administration, which has sough to limit corporate consolidation. Backing out of the agreement will cost JetBlue. Under the terms of the deal, it has to pay Spirit a breakup fee of $69m and Spirit’s shareholders $400m. A federal judge in Boston blocked the proposed merger on Jan. 16, siding with the Justice Department in determining that the merger would reduce competition and give airlines more leeway to raise ticket prices. The judge, William G. Young of U.S. District Court for the District of Massachusetts, noted that Spirit played a vital role in the market as a low-cost carrier and that travelers would have fewer options if JetBlue absorbed it. The Justice Department hailed the termination of the deal on Monday, calling it “a victory for U.S. travelers who deserve lower prices and better choices.” JetBlue and Spirit had appealed Judge Young’s decision, and JetBlue filed an appellate brief as recently as last week. But the companies appear to have concluded that they would be better off walking away than pursuing an appeal that might not succeed. “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,” JetBlue’s CE, Joanna Geraghty, said in a statement on Monday. “We wish the very best going forward to the entire Spirit team.” The decision to terminate the deal was not unexpected. In a securities filing on Jan. 26, JetBlue said it might walk away. Spirit said in its own filing the same day that it believed “there is no basis for terminating” the agreement.<br/>