On 16 January, a US district court decided that JetBlue’s proposed acquisition of rival low-cost carrier Spirit cannot proceed, blocking the deal on anti-competitive grounds. The US government had sued to stop the deal last year.
“JetBlue Airways and Spirit Airlines today reported that they have jointly filed a notice of appeal to the US Court of Appeals for the First Circuit, consistent with the requirements of the merger agreement,” the companies said in a statement on 19 January.
The ruling was a major setback for JetBlue’s growth strategy, which included plans for the pursuit of Spirit’s assets – namely, its fleet of narrowbody Airbus jets. The carrier had previously described the deal as critical to its ambitions of competing with major US airlines.
Spirit, meanwhile, saw the deal as a lifeline amid high debts and increasing costs. As some analysts speculated the rejection of the acquisition could be a death-knell for the Miramar, Florida-based carrier, Spirit said earlier on 19 January that it had already taken measures to bolster its finances.
“During the fourth quarter, the company took several steps to shore up its liquidity to allow it to make the necessary strategic shifts to enable the company to compete effectively in the current demand backdrop and return the business to profitability,” Spirit said
In December, the carrier sold and leased back 20 of its Airbus jets, and in January it completed transactions for five more aircraft, generating a total of $419 million in cash. It’s also ”assessing options” to refinance $1.1 billlion of debt that is scheduled to come due in 2025.
The court’s ruling has potential implications for the broader US airline industry – including Alaska Airlines’ pursuit of Hawaiian Airlines – which is constrained by pilot shortages and a lack of available aircraft.
Both Alaska and Hawaiian have publicly re-committed to their potential transaction, which they announced in early December. At the time, executives called the move “pro-consumer” and “pro-competitive” but that they had not yet spoken to US regulators about it.