JetBlue Airways said Friday it may pull out of its $3.8 billion takeover of Spirit Airlines after a federal judge blocked the deal.
The announcement came just a week after JetBlue and Spirit said they would appeal the ruling, which came in an antitrust case brought by the Justice Department.
In a regulatory filing on Friday, JetBlue said the deal could be terminated after Sunday if certain conditions are not met. Spirit said to her own file that he disagreed with JetBlue and believed there was “no basis to terminate” the deal.
A federal judge in Boston blocked the proposed merger on Jan. 16, ruling that Spirit plays an important role in keeping airfares low and that a takeover by JetBlue would hurt travelers. The ruling was a victory for the Justice Department, which under President Biden has sought to curb corporate consolidation across the economy.
The end date of the agreement is January 28 and, if certain conditions are met, this date is automatically extended to July 24. JetBlue appears to argue that Spirit did not complete the deal, allowing JetBlue to walk away from the deal on or after Sunday.
As part of the merger agreement, JetBlue agreed to pay Spirit and its shareholders a total of $470 million if regulators block the deal.
Some legal experts said JetBlue’s filing Friday suggests the company may eventually seek to challenge the $470 million breakup fee. That fee was instrumental in getting Spirit to settle on JetBlue’s offer and back out of a proposed deal with Frontier Airlines.
“Basically, JetBlue took a gamble,” said Dylan Carson, a former Justice Department antitrust lawyer who is now at the law firm Manatt, Phelps & Phillips.
Spirit is sure to challenge in court any attempt by JetBlue to avoid paying the breakup fee.
Some antitrust lawyers said JetBlue appeared to have decided that appealing the federal judge’s ruling would be costly and time-consuming and likely to fail.
“It certainly seems like right now at least this antitrust division is done letting airline mergers go unchallenged,” said Dan McCuaig, a former Justice Department antitrust lawyer who is now a partner at the law firm Cohen Milstein.
Spirit’s share price fell about 10 percent Friday afternoon. Its stock has lost more than half its value since the deal was blocked as investors worry about its prospects as a stand-alone business. The spirit is not profitable and carries many debts. The airline was also forced to ground some of its jets due to engine trouble.
The stock price of JetBlue, which could save billions of dollars by not appealing and completing the deal, rose about 3 percent Friday afternoon.
Jonnathan Handshoe, an airline analyst for CFRA Research, noted that the merger is at risk at a tumultuous time for the industry. Even as customers spent more on travel in the past year, the price of fuel and labor have risen, and regulators are scrutinizing Boeing and limiting the planemaker’s ability to expand production after a 737 Max 9 jet blew up in during an Alaska Airlines flight. flight this month.
“Given today’s filing, we believe JetBlue will focus on its own future,” Mr. Handshoe said.