There was, not so long ago, a deal in the making to merge Spirit Airlines (NYSE:SAVE) with JetBlue (NASDAQ:JBLU). However, that deal may be about to fall apart as regulators have their say. As a result, Spirit was down over 9%, while JetBlue was up just over 1% at the time of writing.
Despite neither company being what you’d call a major airline, regulators still have a problem with the deal between Spirit and JetBlue. Specifically, regulators believe that the deal would limit competition unduly. Naturally, Spirit and JetBlue officials attempted to appeal to the Department of Justice and the Department of Transportation, but reports suggest that the move didn’t have the desired effect. A full lawsuit to stop the merger may arrive as early as tomorrow.
Reports suggest that this isn’t an everyday occurrence, either; the Department of Transportation plans to use a tactic that labels the deal as “…incompatible with the public interest.” That tactic hasn’t been used since the Carter administration. Though the companies offered to sell off Spirit interests in several areas—including New York and Boston—the plan seems to have cut zero ice with regulators. JetBlue CEO Robin Hayes noted that regulators “…came to the table with their minds made up.”
Currently, consensus calls JetBlue a Hold based on six Holds and one Sell assigned in the past three months. With an average price target of $8.58, JBLU stock has minimal upside potential.
