JetBlue Airways is AQCANending its quest to buy Spirit Airlines more than a month after a federal judge blocked the $3.8 billion deal because of antitrust concerns.
The carriers agreed to scrap the merger after determining they were unlikely to secure the mandatory legal and regulatory approvals in time proceed with the deal, JetBlue announced on Monday. It will pay Spirit $69 million to resolve any remaining matters related to their failed merger.
"Given the hurdles to closing that remain, we decided together that both airlines' interests are better served by moving forward independently," JetBlue CEO Joanna Geraghty said in a statement.
Confirming the development in a separate news release, Spirit CEO Ted Christie said the airline continues to be "confident in our future as a successful independent airline."
Shares of JetBlue edged higher in early Monday trading while Spirit shares plummeted nearly 14%.
The deal has been considered dicey after a federal judge in January ruled that JetBlue's purchase of Spirit would weaken competition by eliminating a major discount airline, potentially resulting in higher airfares for travelers. In siding with the Biden administration in opposing the proposed takeover, Judge William Young found the deal would "harm cost-conscious travelers who rely on Spirit's low fares."
On Monday, the Justice Department declared the decision to abandon the deal a victory for its work on behalf of consumers.
"The Justice Department proved in court that a merger between JetBlue and Spirit would have caused tens of millions of travelers to face higher fares and fewer choices," Attorney General Merrick Garland said in a statement. "We will continue to vigorously enforce the nation's antitrust laws."
JetBlue and Spirit had argued their union would let the merger carrier offer low-cost fares in more markets around the country and help it compete with larger airlines.
The airlines agreed to a deal in July 2022 after JetBlue made an unsolicited offer for Spirit, weeks after it struck a deal with competing budget carrier Frontier.
Kate Gibson is a reporter for CBS MoneyWatch in New York.
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