JetBlue to pay $69M in termination of Spirit Airlines merger agreement

JetBlue (JBLU) announced that it has reached an agreement with Spirit Airlines (SAVE) to terminate their July 2022 merger agreement. JetBlue and Spirit mutually agreed that terminating is the best path forward for both companies as required closing conditions, including receiving necessary legal and regulatory approvals, were unlikely to be met by the merger agreement’s outside date of July 24. “We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines,” said Joanna Geraghty, chief executive officer, JetBlue. “We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently. We wish the very best going forward to the entire Spirit team.” Under the agreement, JetBlue will pay Spirit $69M and the termination resolves all outstanding matters related to the transaction and under which any claims between them will be mutually released. JetBlue also remains on track to deliver $175M-$200M in cost savings from its structural cost program and $75M in maintenance savings from its fleet modernization, as well as incremental savings from targeted fixed cost base reductions, positioning the company to approach breakeven operating margins in 2024. These initiatives are just the starting point as JetBlue rebuilds its long-term organic strategy with a renewed focus on driving sustained profitability for its crewmembers and investors. JetBlue will hold an investor day on Thursday, May 30 to provide additional detail on its long-term strategy and ongoing revenue and cost initiatives. Further information regarding Investor Day will be shared with analysts and investors in the coming weeks.