JetBlue may terminate $3.8 billion Spirit Airlines buyout offer
JETBLUE AIRWAYS warned that it may end its bid to acquire low-cost carrier Spirit Airlines as soon as this weekend after a 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 $3.8 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 Sunday.
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, slumped 11 per cent in afternoon trading, while JetBlue Airways Corp. gained three per cent.
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 $2.1 billion, and Spirit has lost $1.7 billion.
Should the deal fall through because of government opposition, JetBlue could be saddled with a $470 million reverse breakup fee, $70 million for Spirit and $400 million for its shareholders.