Spirit Airlines Inc (SAVE  ) is reportedly encouraging JetBlue Airways Corporation (JBLU  ) to appeal a recent federal judge's decision blocking their planned $3.8 billion merger.

This move comes after U.S. District Judge William Young sided with antitrust regulators, asserting that the consolidation could lead to increased passenger fares.

The budget airline's shares have plummeted by over 60% since the ruling.

The broader U.S. airline landscape, dominated by United Airlines Holdings Inc (UAL  ), American Airlines Group Inc (AAL  ), Delta Air Lines Inc (DAL  ), and Southwest Airlines (LUV  ), controls approximately 80% of the market.

Had the deal been successful, it would have formed the fifth-largest carrier in the U.S., contributing significantly to Spirit's survival.

While JetBlue has yet to decide on an appeal, Reuters noted that analysts suggest paying a $470 million breakup fee may be a more viable option.

However, this path requires JetBlue to demonstrate adherence to the deal contract's obligations to exhaust all efforts to finalize the merger.

As the companies remain silent on potential actions, industry insiders speculate whether the two airlines will jointly appeal the judge's decision. With a 30-day window to appeal, the outcome remains uncertain.

JetBlue had attempted to address regulatory concerns by divesting gates and slots at key airports. However, the deteriorating condition of Spirit's business since the merger agreement in July 2022 adds complexity to the decision-making process.

In an SEC filing, Spirit Airlines said the fourth quarter 2023 revenue is expected to be at the high end of the company's initial guidance. It expects sales of $1.32 billion versus the consensus of $1.31 billion.

The company sees fourth-quarter operating expenses to come in better than expected.

Adjusted operating margin guidance for the fourth quarter of 2023 is positively revised 450 basis points from negative 15%-19% to negative 12%-13%.

Spirit Airlines says that as of December 31, 2023, it had $1.3 billion of liquidity and is assessing options to refinance debt to extend the final maturity to September 30, 2025. The company is also assessing options to refinance its 2025 debt maturities.

The company estimates capacity growth for the first quarter of 2024 will be up 1%-2% Y/Y.

"Spirit will continue to take steps to shore up its balance sheet," Reuters noted, citing a source. "What we're looking at is refinancing debt."

Price Action: SAVE shares are up 25.6% at $7.15, and JBLU shares are up 2.34% at $5.168 on the last check Friday.