JetBlue Could Terminate Its Merger With Spirit Airlines As Soon As Sunday

According to a form 8-K filed with the Securities and Exchange Commission, JetBlue has served notice that it may opt to terminate its agreement to buy Spirit Airlines. This termination could happen as early as Sunday.

Yesterday, JetBlue Airways Corporation (“JetBlue”) informed Spirit Airlines, Inc. (“Spirit”) that certain conditions to closing required by the Agreement and Plan of Merger, dated as of July 28, 2022, among JetBlue, Spirit and Sundown Acquisition Corp., a Delaware corporation, and a direct wholly owned subsidiary of JetBlue (the “Merger Agreement”) may not be satisfied prior to the outside dates set forth in the Merger Agreement (and also informed Spirit that accordingly the Merger Agreement may be terminable on and after January 28, 2024).

JetBlue continues to evaluate its options under the Merger Agreement. Unless and until such time as the Merger Agreement is terminated pursuant to its terms, JetBlue will continue to abide by all of its obligations under the Merger Agreement.

JetBlue outbid Frontier Airlines in a competition to buy Spirit. The don’t want Spirit’s business model or even customers. They just want the planes and pilots, in order to grow. Since then,

  • The Department of Justice opposed the deal, and won a verdict to block the merger.
  • Spirit Airlines financials have eroded, and is now worth far less. Analysts had been calling for JetBlue to renegotiate down the purchase price.
  • JetBlue’s own performance has been poor and they’ve announced route cuts. Without the Northeast Alliance with American Airlines, also blocked by the DOJ, they have less of a path to grow (they’re having to return slots in New York to American).

The airline was overpaying for Spirit to begin with. Any path to complete the merger runs through appeals courts and isn’t just time consuming and uncertain, at a time their business needs certainty, it’s also expensive. JetBlue has to pay around $11 million per month to Spirit shareholders for each month that the deal remains in limbo, and that’s no longer creditable against the $470 million breakup fee that JetBlue will owe to Spirit if the deal doesn’t close.

JetBlue’s own operation has been poor. They were the worst on-time performer among major U.S. airlines in 2023, and the distraction of a merger integration prevents them from getting their own house in order. It’s time for them to walk away from the Spirit deal and build a new strategy.

  • American Airlines opened the possibility of reconstituting its partnership with JetBlue. Not only are they appealing the court ruling against the Northeast Alliance, but the judge in that case expressly explained that a partnership along the lines of what American and Alaska have would be acceptable.

  • Meanwhile if JetBlue wants to do an acquisition, they could go after money-losing Breeze Airways. Not only is the fleet of Airbus A220s compatible and they’d be acquiring pilots who could fly those planes, but it would bring the triumphant return of JetBlue’s founder Dave Neeleman – a return not unlike Steve Jobs to Apple, instantly injecting hope and enthusiasm into the airline’s culture.

Breeze Airways Embraer E-195

(HT: Enilria)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. The B6/NK merger is nonsense. B6 is over-paying for assets it will need to spend even larger sums of money to harmonize. It will likely walk away and hopefully focus on running a more reliable operation and a more profitable one, rather than chasing vanity trophies like TATL routes served on premium heavy planes that don’t work outside of the summer. Otherwise, B6 is headed for bankruptcy and an eventual acquisition and the acquirer will be American Airlines.

  2. I suspect that B6 is realizing they need to cut their losses on the NK merger attempt and go back to trying to develop a relationship with American that will pass regulatory muster. There is more potential for JBLU in NYC and BOS working w/ AAL than there is in trying to push through a costly merger and reconfiguration of SAVE. Rebuilding a relationship with AAL makes more sense financially and can be done at much lower risk, including the ability to lease slots at LGA and JFK from AAL that can’t figure out how to use all the slots they have.
    It is also possible that Frontier Airlines could renew its merger proposal for Spirit which B6 jumped in and tried to top. Unlike JBLU-SAVE, ULCC-SAVE involves less overlap and doesn’t eliminate an ultra low cost carrier.
    B6′ ex-CEO bit off more than he or the company could chew w/ the NEA as originally configured and the NK merger.
    I suspect his departure was as much because he didn’t want to have a heart attack when the board told him he would be fired for two failed strategies that the feds themselves shot down.

  3. B6 knows this merger is dead. The only reason for the appeal was probably to meet their contractual obligations.

  4. If JetBlue built a relationship with AA and joined Oneworld, that would be fantastic. They already have a relationship with Qatar and Hawaiian. JetBlue also has a fantastic Caribbean route network. There’s so much opportunity for Oneworld to really dominate connectivity in the Western hemisphere.

  5. Egomaniacal, overrating their own product (Mint is domestic First by another name), overblown sense of self-importance, total ignorance of things outside of its own sightline…yes, this is New York’s Airline, because it’s an exact representation of a New Yorker. The sooner it dies, the better it is for everyone who lives outside of the five boroughs.

  6. Overcooked,
    and worse yet, I didn’t write the article that was cited
    Gary lets all kinds of people on this site – including under FAKE NAMES but you would think that it wouldn’t be that hard to read the name of the author of an article.

  7. It may be for the best. Look how the absorbed company has worked for a lot of mergers. The bad ideas get taken into the larger company and cause major problems.

  8. Before anyone acquires NK, they will require a Chapter 11 filing and provide Debtor in Possession financing. Slots, NEO airframes, and trained pilots are its true assets. Many others will be let go in the realignment.

  9. Anyone know how realistic Jetblue joining Oneworld would be if American is able to pull the strings? I just wonder if they would allow a 3rd American carrier to the alliance.

  10. Boarding pass,
    the notion that NK will go into bankruptcy and be stripped of its assets including its order book is naive.
    If NK goes through chapter 11, its assets will be what it holds onto in order to emerge as a stronger player.
    Of course, another carrier can try to buy NK in bankruptcy but you have to go through an entire DOJ review and NK creditors are very likely to reject any attempts to buy up parts of the estate because it would eliminate any possibility of restructuring.
    NK is nowhere near liquidation which is the only way its assets – including orders – could be reallocated to other carriers.

  11. @Tim Dunn
    I think you have confused Chapter 7 with Chapter 11.
    Eleven allows a company to maintain its business while working with creditors and the courts for a “recovery plan”. Also entices suppliers, employees, air frame & engine providers, and unions to renegotiate contracts. Debtor in possession understands the value of the company in question and usually acquires such company upon exit from Chapter 11.
    Example: Before AA bought TWA, requested it file Chapter 22 (2nd bankruptcy). AA provided debtor in possession financing.

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