Emergency landing
JetBlue and Spirit have officially grounded their $3.8 billion merger agreement, just weeks after a federal court judge blocked the deal due to antitrust concerns originally raised by the Justice Department last March.
The acquisition, which was announced over 18 months ago after JetBlue forced out Frontier in an extended bidding war, would have seen the 2 merge to form the 5th largest airline in the US — its breakdown now has some pondering the chances of Spirit’s survival altogether.
Spirit in the sky
Having become synonymous with the fee-heavy-low-fare airline model — leading the way by charging its customers for everything from checking bags to picking your seats — Spirit, and its low-cost carrier competitors, has revolutionized cheap travel. But, despite hauling hundreds of millions of dollars in baggage fees, the airline struggled to turn a profit, as everything from fuel, to aircraft rent, to landing fees took the carrier to a $495m operating loss last year.
The deal with JetBlue might have given the combined entity the ability to share certain overhead costs, optimize flight schedules, and win more market share in the low-cost segment. The last piece of that puzzle was exactly what regulators were concerned about, with judges blocking the deal on concerns that it would harm cost-conscious customers and restrict competition in the space.
Low spirits: Shares in the airline have dropped 15% in the last 48 hours.
