Within the last hour, JetBlue has announced the decision to terminate it’s merger agreement with Spirit Airlines.
In their statement today, the airline also said that a focus on profit sustainability is now in place.
Without further ado, let’s get into it…
JetBlue-Spirit Merger Terminated…
In a statement, JetBlue CEO Joanna Geraghty said the following on the decision:
“[The airline] believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines”.
“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.”
“We wish the very best going forward to the entire Spirit team.”
“JetBlue has a strong organic plan and unique competitive advantages, including a beloved brand, a unique value proposition, and high-value geographies”.
“We have already begun to advance our plan to restore profitability.”
“We look forward to sharing more on our progress in the coming months.”
As a result of this termination, JetBlue will pay Spirit $69 million, which will resolve all outstanding matters.
Such a termination was also met because the target for completion being July 24 this year was not likely.
This was due to the Courts blocking the proposed merger between the two sides back in January.
The Airline in Blue Focusing on Profitability…
JetBlue breaks away from Spirit Airlines as the new focus is now on profitability and sustainability.
In that same statement, this is what the airline has said on the matter:
“As outlined on the company’s fourth quarter earnings call, JetBlue is taking decisive action to return to sustained profitability and drive shareholder value.”
“As part of this work, the company is refocusing on its core strengths – deepening its network relevance in proven geographies and better segmenting its product offerings to enhance its competitive position – while delivering meaningful cost savings.”
“To date, JetBlue has identified multiple near-term revenue initiatives for 2024, including increased distribution and partnerships, expanded loyalty program functionality, network initiatives, and ancillary initiatives, which will deliver over $300 million in revenue benefits.”
“JetBlue also remains on track to deliver $175-200 million in cost savings from its structural cost program and $75 million in maintenance savings from its fleet modernization, as well as incremental savings from targeted fixed cost base reductions, positioning the company to approach breakeven operating margins in 2024.”
“These initiatives are just the starting point as JetBlue rebuilds its long-term organic strategy with a renewed focus on driving sustained profitability for its crewmembers and investors.”
This will no doubt come as a blow to Spirit Airlines, but under the helm of Ms. Geraghty, financial sustainability matters more.
What Does This Now Mean?
What this means is the following:
JetBlue and Spirit will not be merging after all. Both airlines will continue to operate individually.
For both sides, this has been a costly endeavour, in which they will need to recover from this.
However, expansion is still rife between the two carriers, with the best option being to grow on their own.
Looking ahead, it will be interesting to see if JetBlue will ever want to continue such a process to merge.
However, with this current deal terminated, Spirit Airlines may remain sceptical going into the future.
But for now, things have come to an end, with all eyes on what will happen next following this.
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