Spirit Airlines Pushes JetBlue to Appeal Blocked Merger Ruling As Stock Rebounds

The past few days have been a bit of a rollercoaster ride for Spirit Airlines.

After a judge rejected a proposed merger between Spirit and JetBlue, the budget airline's stock prices experienced a serious decline, losing nearly half its value earlier this week.

That downward trend continued through Thursday. And making matters worse the beleaguered airline also apparently has significant debt payments due in 2025.

By this morning, however, Spirit's stock price had ticked back upward more than 20 percent.

The end-of-week about-face in the carrier's stock price is being attributed to an update that Spirit provided investors, which stated that: “Adjusted operating margin guidance for the fourth quarter 2023 is positively revised 450 basis points from negative 15 to 19 percent to negative 12 to 13 percent.”

In other words, things may not be as bad as they seem for Spirit and the airline is not losing quite as much money as it had anticipated it would. This revised outlook is based on a better-than-expected holiday travel season for the airline and simultaneously, the drop in the price of jet fuel, per an article in Quartz.

Aside from its stock price drama, Spirit has been urging JetBlue appeal the federal court ruling that blocked the proposed merger between the two airlines, Reuters reported.

U.S. District Judge William Young issued a ruling on Tuesday on the proposed $3.8 billion merger. The judge ultimately decided that should the two airlines join forces it would result in higher airfare for consumers.

The ruling amounts to a victory for the Biden Administration and the U.S. Justice Department, which sued to stop JetBlue's acquisition of ultra-low-cost carrier Spirit in March 2023, arguing it would all but eliminate competition and lead to more expensive airline tickets for American air travelers.

However, rather than give up, Spirit has pointed out to JetBlue that their deal contract stipulates that the airlines should pursue all legal options in order to make the merger happen. That includes appealing the judge’s ruling, Reuters reported.

It remains unclear, however, whether JetBlue will appeal. At this point, sources report that JetBlue is reviewing the likelihood of whether it would be successful in an appeal. It’s also not lost on JetBlue that the financial condition of Spirit Airlines has changed substantially since the two carriers agreed to a merger back in 2022.

There are also financial analysts who suggest JetBlue may be better off paying to part ways with Spirit. Breaking the deal with Spirit would cost JetBlue about $470 million. In addition, JetBlue would need to show that it did everything possible to try and complete the merger.

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