Spirit Airlines anticipates that the Department of Justice (DOJ) will determine within the next 30 days whether to let the airline to move through with the merger after its shareholders approved it in October 2022.
Ted Christie, the Chief Executive Officer (CEO) of Spirit Airlines, said on the company’s Q4 2022 earnings call on February 7, 2023, “We anticipate hearing from the DOJ in the next 30 days or so, and that’s really all we have to say on that topic for now.”
The two parties intend to finish the merger “no later than the first half of 2024,” according to an earnings presentation from the same time period.
Following a 2.9% billion cash-and-stock bid from Frontier Airlines, another US-based low-cost carrier, in February 2022, JetBlue pounced to acquire Spirit Airlines with an all-cash offer in April 2022.
JetBlue made an initial bid of $3.6 billion, later sweetening the transaction with increased reverse break-up costs and an accelerated prepayment to Spirit’s shareholders over the course of the following few months.
A $2.5 per share prepayment to Spirit Airlines’ shareholders and a ticking fee payment of $0.10 per share per month between January 2023 and the completion of the merger were ultimately agreed upon by the boards of directors at both JetBlue and Spirit in July 2022.
The merger with JetBlue was authorized by the company’s owners in October 2022.
Since JetBlue is already under DOJ inquiry as a result of its Northeast Alliance with American Airlines, worries regarding DOJ clearance will persist.
In a statement from September 2021, the DOJ noted that it has launched legal action to halt the alliance’s plans to combine operations in Boston and New York.
“The Northeast Alliance would eliminate significant competition in this important industry,” said Richard Powers, the now-former Acting Assistant Attorney General at the DOJ’s Antitrust Division.
“This sweeping partnership is unprecedented among domestic airlines and amounts to a de facto merger between American and JetBlue in Boston and New York City,” Powers added.
The DOJ, the two airlines, and the proposed alliance between JetBlue and American Airlines went to trial in November 2022, and the case is currently pending.