JetBlue Airways aircraft are pictured at departure gates at John F. Kennedy International Airport in New York on June 15, 2013.
Fred Prouser | Reuters
JetBlue Airways and Spirit Airlines on Monday said they are ending their agreement to merge, weeks after losing a federal antitrust lawsuit that challenged the deal.
A federal judge in January blocked JetBlue’s attempted takeover of budget carrier Spirit after the Justice Department sued to bar the deal last year. The Justice Department alleged the acquisition would stifle competition in the airline industry and eliminate Spirit as a discount alternative for price-conscious travelers.
JetBlue and Spirit appealed the judge’s decision a couple of days later, but JetBlue noted the appeal was required under the terms of the merger agreement. Analysts had expected little chance of a successful appeal.
Spirit shares tumbled 17% in premarket trading, while shares of JetBlue were up roughly 4%.
Almost two years ago, JetBlue swooped in with an unsolicited bid for Spirit Airlines, which had struck a merger agreement with fellow budget airline Frontier, and ultimately won shareholder approval to buy Spirit.
“It was a bold and courageous plan intended to shake up the industry status quo, and we were right to compete with Frontier and go for an opportunity that would have supercharged our growth and provided more opportunities for crewmembers,” JetBlue CEO Joanna Geraghty said in a note to staff on Monday.
“However, with the ruling from the federal court and the Department of Justice’s continued opposition, the probability of getting the green light to move forward with the merger anytime soon is extremely low.”
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