File: A JetBlue Airlines plane near a Spirit Airlines plane at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida. (Photo by Joe Raedle/Getty Images)
Low-cost carriers JetBlue and Spirit agreed to terminate their $3.8 billion merger agreement after facing significant regulatory and legal hurdles.
On Monday, the airlines issued a joint statement saying that the decision "is the best path forward" because the companies likely wouldn't be able to meet closing conditions, which included receiving legal and regulatory approvals by the deal's July 2024 deadline.
"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," said JetBlue CEO Joanna Geraghty.
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Geraghty, who took over as CEO last month, argued the deal, announced in July 2022, "would have unleashed a national low-fare, high-value competitor to the Big Four airlines."
Spirit CEO Ted Christie also argued that the deal "would save hundreds for millions for consumers and create a real challenger to the dominant ‘Big 4’ U.S. airlines."
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"However, we remain confident in our future as a successful independent airline," Christie added.
From December 2022 to November 2023, American, United, Delta and Southwest account for 80% of the domestic market share, according to the most recent data from the Transportation Department.
In comparison, JetBlue and Spirit accounted for 5.3% and 5.1%, respectively.
In January, a federal judge blocked JetBlue's acquisition of Spirit after agreeing with the Justice Department that the deal would hurt the availability of low-cost air travel tickets.
U.S. District Judge William Young wrote that the proposed merger between JetBlue and Spirit "does violence to the core principle of antitrust law: to protect the United States’ markets – and its market participants – from anticompetitive harm."
Young also argued that "consumers that rely on Spirit's unique, low-price model would likely be harmed."
In short order, the carriers filed a notice of appeal with the First U.S. Circuit Court of Appeals to try and reverse the decision.
After getting dealt a major blow, people familiar with the matter told The Wall Street Journal that Spirit was looking for ways to address its financial challenges.
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FOX Business' Eric Revell contributed to this report.