Shares of Spirit Airlines (NASDAQ: SAVE) saw a significant decline on Friday following an announcement by JetBlue Airways (NASDAQ: JBLU) that the ongoing merger agreement between the two companies may be terminated due to certain closing conditions not being met. The disclosure was made in a filing with the Securities and Exchange Commission.
JetBlue informed Spirit that the required conditions for completing the deal might not be met within the expected timeframe. This raises the possibility of termination of the merger agreement on or after January 28, 2024.
Spirit Airlines did not immediately provide a comment in response to the request from __.
As a result of this news, Spirit’s stock tumbled 12% on Friday, closing at $6.33. Meanwhile, JetBlue’s shares experienced a 2.8% increase and closed at $5.50.
The attempted acquisition of Spirit Airlines by JetBlue Airways has faced numerous obstacles since the summer of 2022. Following a prolonged battle with Frontier Group Holdings, JetBlue emerged as the preferred buyer. However, in March 2023, the U.S. Justice Department stepped in and sued to block the merger. The lawsuit claimed that the transaction would lead to increased fares and reduced options for consumers across various routes in the country.
Ten days ago, a federal judge issued an injunction to halt the proposed acquisition. In his ruling, Judge William Young emphasized that the merger would negatively impact Spirit’s price-sensitive customer base. Subsequently, both companies jointly filed an appeal to the U.S. Court of Appeals for the First Circuit.
Many industry analysts view the potential termination of the merger as a favorable outcome for JetBlue. J.P. Morgan analyst Jamie Baker recently highlighted in a research note that the federal court’s ruling “frees JetBlue from a costly merger,” suggesting that the airline’s management and board may no longer be committed to the deal unless significant changes are made to the terms.
