JetBlue and Spirit Airlines announced today that they have mutually decided to end the merger agreement they had signed in July 2022 after failing to find ways to navigate regulatory hurdles while maintaining the viability of the operation before the deadline in four months, even though they continue to believe that it would be beneficial for competition against what they call the «big four dominant airlines» in the United States (American Airlines, Delta Air Lines, United Airlines, and Southwest Airlines).
«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,» said Joanna Geraghty, CEO of JetBlue, company that will now have to pay USD 69 million to Spirit.
«JetBlue has a strong organic plan and unique competitive advantages, including a beloved brand, a unique value proposition, and high-value geographies. We have already begun to advance our plan to restore profitability. We look forward to sharing more on our progress in the coming months«, continued Geraghty.
«After discussing our options with our advisors and JetBlue, we concluded that current regulatory obstacles will not permit us to close this transaction in a timely fashion under the merger agreement«, added Ted Christie, President and CEO of Spirit.
«Throughout the transaction process, given the regulatory uncertainty, we have always considered the possibility of continuing to operate as a standalone business and have been evaluating and implementing several initiatives that will enable us to bolster profitability and elevate the Guest experience», he added.
In their respective statements, both airlines emphasized that they will focus on returning to profitability.
JetBlue detailed that it has identified «multiple near-term revenue initiatives for 2024, including increased distribution and partnerships, expanded loyalty program functionality, network initiatives, and ancillary initiatives, which will deliver over $300 million in revenue benefits«, while also «on track to deliver $175-200 million in cost savings from its structural cost program and $75 million 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«.
In 2023, JetBlue reported a net loss of USD 310 million, an improvement from the USD 362 million loss the previous year. Spirit, on the other hand, reported a net loss of USD 447.46 million vs. USD 554 million in 2022.
