JetBlue Called Off 3.8 billion Merger with Spirit Airlines

The July 2022 merger agreement between JetBlue and Spirit Airlines was announced as terminated.

JetBlue and Spirit agreed that terminating the combination is in their best interests due to the unlikely completion of essential closing conditions, such as obtaining legal and regulatory approvals, by the July 24, 2024, deadline specified in the merger agreement, even though both companies continue to believe in the combination's procompetitive advantages.

According to Joanna Geraghty, the CEO of JetBlue, the pursuit of this Spirit Airlines JetBlue merger was deemed worthwhile due to the potential establishment of a high-value, low-cost national competitor to the Big Four airlines. "We take great pride in the collaborative effort we exerted with Spirit to establish a vision that aimed to disrupt the prevailing norms. However, considering the outstanding obstacles to consummation, we have mutually determined that the best course of action for both airlines is to proceed autonomously. We extended our sincere aspirations for the Spirit team moving forward."

JetBlue merger with Spirit will receive $69 million from JetBlue by the agreement terms. Upon termination, all pending issues about the transaction will be resolved, and both parties will relinquish any claims that may have arisen.

"Unique competitive advantages, such as a beloved brand, a distinctive value proposition, and high-value geographies, complement JetBlue's robust organic strategy," Geraghty continued. "Progress towards revitalizing profitability has already commenced." In future months, we eagerly anticipate giving further updates on our progress. JetBlue is implementing resolute measures to restore consistent profitability and enhance shareholder value, as disclosed during its fourth-quarter earnings call. To improve its competitive position and realign its product offerings with proven geographies and more profound network relevance, the organization is realigning its efforts around these fundamental assets while achieving significant cost reductions.

At this time, JetBlue has identified several revenue initiatives that will generate over $300 million in benefits for the company's finances shortly, including partnerships and distribution expansion, loyalty program functionality enhancements, network improvements, and ancillary initiatives. In addition, JetBlue maintains its progress towards achieving breakeven operating margins by 2024 through incremental cost savings from targeted fixed cost base reductions and programmatic cost savings of $75 million for maintenance and $175-200 million for structural costs resulting from fleet modernization. JetBlue is reorienting its long-term organic strategy toward generating sustained profitability for its investors and crewmembers. These initiatives serve as an initial stride in this renewed effort.

JetBlue will host an Investor Day on Thursday, May 30, 2024, presenting further information regarding its ongoing revenue, cost initiatives, and long-term strategy.