JetBlue Airways Corp (NASDAQ: JBLU) shares are trading higher Monday after the company announced a termination of its agreement with Spirit Airlines Inc (NYSE: SAVE). Spirit shares were halted on the news before trading significantly lower.
What To Know: JetBlue and Spirit have reached an agreement to terminate their July 2022 merger agreement. Both companies continue to believe in the procompetitive benefits of the combination, but said all conditions were unlikely to be met by the merger agreement's outside date of July 24.
"We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines," said Joanna Geraghty, CEO of JetBlue.
"We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines' interests are better served by moving forward independently."
JetBlue will pay Spirit $69 million. The termination resolves all outstanding matters related to the transaction.
JetBlue noted that it has identified multiple near-term revenue initiatives for 2024 that it expects to deliver over $300 million in revenue benefits. The company said it also remains on track to deliver $175 million to $200 million in cost savings from its structural cost program and $75 million in maintenance savings from its fleet modernization.
JetBlue will hold an Investor Day on May 30 to provide additional detail on its long-term strategy and ongoing revenue and cost initiatives.
JBLU Price Action: JetBlue shares were up 5.1% at $6.80 following the announcement, according to Benzinga Pro. Spirit shares were down 14.1% at $5.55 at the time of publication.