Proactive Investors - JetBlue Airways (NASDAQ:JBLU) has torn up its proposed takeover of Spirit Airlines after a federal judge blocked the $3.8 billion deal.
Shares in New York airline JetBlue jumped almost 4% in early trading, while those in budget carrier Spirit plummeted almost 15%.
US authorities sued last year to block the proposed acquisition, saying it would threaten competition in passenger aviation. A federal judge ruled in their favour in January, halting the deal.
JetBlue said that although though both companies believed in the deal, they were unlikely to meet the required closing conditions before a July deadline.
As a result, JetBlue will pay Spirit a $69 million termination fee to resolve matters between the two.
JetBlue boss Joanna Geraghty said the merger was “a bold and courageous plan intended to shake up the industry status quo” and accelerate growth.
“However, with the ruling from the federal court and the Department of Justice’s continued opposition, the probability of getting the green light to move forward with the merger anytime soon is extremely low,” she said in a memo to employees.