JetBlue Could Cancel Spirit Airlines Purchase

JetBlue could look to cancel its purchase agreement with Spirit Airlines as it assesses conditions it may not be able to meet.

Spirit’s planned takeover by JetBlue is now at further risk of collapsing after JetBlue cast doubt on the deal.

JetBlue’s coming forward and expressing their doubts comes only a matter of days after a judge ruled against the merger between the pair; however, an appeal was made into the decision.

What’s Going On Now?

JetBlue, towards the end of the week just gone, said that they were concerned whether they could meet specific conditions laid out as part of the agreement between themselves and Spirit Airlines.

Termination of the purchase agreement, not from the judge but from JetBlue themselves, is now something that could occur sooner rather than later. However, it remains unclear just what conditions JetBlue would be unable to meet area.

Such a move would deal a blow for Spriit, who had previously pushed JetBlue to appeal the purchase. JetBlue, at least for the moment, says it is continuing to evaluate the circumstances unfolding before carefully making its next decision.

While a breakup fee would be required if a deal ceased, some analysts believe JetBlue moving away from such an agreement would have more positive repercussions than negative.

Spirit Relies On Deal

A deal for Spirit with JetBlue has been labelled by some analysts as essential to the long-term survival of the airline. This low-cost major U.S. airline has struggled to turn a profit for years with its last profit coming prior to the pandemic.

Ultimately, Spirit has struggled to optimise its model to turn a regular profit and thus the words of ressctruring and bankruptcy have been floated around by several people who have kept a watchful eye on the company.

While these words are strong ways to describe the unfolding situation at the company, ultimately the picture that has been painted is bleak. Refinancng debt is what the Reuters has reported has something that will be of key focus, for the moment ultimately is not something in the pipeline.

Daniel Fowkes
28 Jan 2024
· Airlines 

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