JetBlue, Spirit Airlines cancel merger after US court says deal violates antitrust law

JetBlueand Spirit Airlines formally pulled the plug Monday on their merger, about six weeks after a federal judge ruled it violated US antitrust law.

The companies had positionedJetBlue's $3.8 billion purchase of Spirit as beneficial to consumers, but a federal judge in January sided with the US Justice Department, which had argued that the removal of the no-frills Spirit would lead to higher fares.

The companies decided after concluding that, given the legal situation, they were unlikely to meet the merger's deadline of July 24, 2024.

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JetBluewill pay Spirit $69 million as a termination fee.

"We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines," saidJetBlueChief Executive Joanna Geraghty.

"Given the hurdles to closing that remain, we decided together that both airlines' interests are better served by moving forward independently."

In a statement, US Attorney General Merrick Garland calledJetBlue's decision "another victory for the Justice Department's work on behalf of American consumers."

"We will continue to vigorously enforce the nation’s antitrust laws," he added.

Shares of Spirit slumped 14.5 per cent in early trading Monday, whileJetBluerose 3.9 per cent.

Spirit remains confident "in our future as a successful independent airline," said Chief Executive Ted Christie in a company statement.

"After discussing our options with our advisers andJetBlue, we concluded that current regulatory obstacles will not permit us to close this transaction in a timely fashion under the merger agreement," he added.

"We are disappointed we cannot move forward with a deal that would save hundreds of millions for consumers," he said.

Spirit said it has enlisted advisers on efforts to refinance and reduce debt payments.

(With inputs from agencies)