In a recent development, JetBlue Airways Corp. has indicated the possible termination of its planned $3.8 billion acquisition of Spirit Airlines Inc due to certain terms that “may not be satisfied” by the dates in the merger agreement.
The exact terms referred to in the merger agreement have not been specified by JetBlue, although it has stated that it is continuing to evaluate options. In response, Spirit Airlines Inc. has stated that it “believes there is no basis” for the termination of the deal, further reaffirming its commitment to adhering to all obligations within the agreement.
The impending showdown between the airlines marks a stark contrast from their previous rhetoric, as they had planned to combine operations since 2021 in an attempt to challenge the industry’s reigning airlines. The acquisition of Spirit would bolster JetBlue’s fleet and workforce at a critical time when both remain scarce across the industry.
Following recent pushbacks, Spirit Airlines Inc.’s shares have experienced a significant downturn, levelling at a 16% drop in value. The situation has been made more tumultuous by the looming threat of bankruptcy, thus sparking speculation that Spirit may be forced into it without the deal. Conversely, JetBlue’s shares experienced an uptick, trading up 1.8%.
If the deal is quashed due to antitrust reasons, JetBlue would be required to pay Spirit a total of $70 million, with an additional $400 million due to Spirit shareholders. Furthermore, if the deal implodes under specific circumstances, Spirit could be bound to pay JetBlue a $94.2 million breakup fee, according to the agreement. This would not be the first such occurrence, as a federal court ruling last year thwarted JetBlue’s route-sharing partnership with American Airlines Group Inc., thus negatively affecting the company’s expansion efforts.