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<\/div>\nLow-cost air carriers <\/span>JetBlue Airways and Spirit Airlines canceled their $3.8-billion merger agreement on Monday, seeing no path forward<\/span> after a U.S. judge blocked the deal in January on <\/span>anti-competition concerns.<\/p>\n A successful deal would have created the fifth-largest carrier in the United States and helped Spirit ensure <\/span>its survival, but the deal had been on the ropes ever since a Boston judge said it would harm consumers by reducing competition.<\/span><\/p>\n The decision is a victory for the Biden Administration, which has taken a hard line against tie-ups in the aviation sector and argued the deal would boost ticket prices for consumers.<\/span><\/p>\n U.S. Attorney General Merrick Garland said the decision by JetBlue \u201cis yet another victory for the Justice Department\u2019s work on behalf of American consumers\u201d saying the merger \u201cwould have caused tens of millions of travelers to face higher fares and fewer choices.\u201d<\/span><\/p>\n The administration has used antitrust action and other enforcement efforts to try to bring down prices for U.S. residents across several industries.<\/span><\/p>\n \u201cWith the ruling from the federal court and the Department of Justice\u2019s continued opposition, the probability of getting the green light to move forward with the merger anytime soon is extremely low,\u201d JetBlue CEO Joanna Geraghty told employees in an internal note seen by Reuters.<\/span><\/p>\n \u201cEven if the ruling was overturned on appeal, we simply don\u2019t see a path to regulatory approval by the required July 24 deadline.\u201d<\/span><\/p>\n Spirit CEO Ted Christie said in a statement, \u201cwe concluded that current regulatory obstacles will not permit us to close this transaction in a timely fashion under the merger agreement.\u201d<\/span><\/p>\n Under the agreement, JetBlue will pay Spirit $69 million. While the merger agreement was in effect, Spirit stockholders received approximately $425 million in total pre-payments.<\/span><\/p>\n Without the JetBlue deal, Spirit, the seventh-largest U.S. carrier, <\/span>faces a rough road ahead. The ultra-low-cost carrier has grappled with weak demand in its key markets as it seeks to return to sustainable profitability. Some analysts have even suggested the company could face bankruptcy if it cannot shore up finances.<\/p>\n Spirit shares fell 14% in late morning trading, while <\/span>JetBlue, the sixth-largest U.S carrier,<\/span> shares rose 4%.<\/span><\/p>\n The ruling by U.S. District Judge William Young found the proposed deal was likely to hurt competition in the U.S. aviation market and could hike<\/span> ticket prices.<\/p>\n That prompted JetBlue to raise doubts over the future of its deal, saying it might be unable to meet certain conditions required as part of the agreement.<\/p>\n JetBlue opted not to appeal a separate ruling that had declared its Northeast partnership with American Airlines anticompetitive.<\/span><\/p>\n JetBlue, which last month hiked baggage fees, said is working on numerous near-term efforts to boost revenue by more than $300 million and said it is 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.<\/span><\/p>\n A judge in May sided with the Justice Department and six states in a lawsuit challenging the joint venture that American and JetBlue entered into in 2020, called the \u201cNortheast Alliance,\u201d joining forces for flights in and out of New York City and Boston, coordinating schedules and pooling revenue.<\/span><\/p>\n Spirit said it was taking steps to ensure the strength of its balance sheet and ongoing operations and retained Perella Weinberg & Partners and Davis Polk & Wardwell as advisors.<\/span><\/p>\n Photo: AP Photo\/Chris O\u2019Meara, File<\/em><\/p>\n Topics<\/span> Mergers & Acquisitions<\/a> Aviation<\/a> <\/p>\n<\/p><\/div>\n Was this article valuable?<\/p>\n<\/p><\/div>\n
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