JetBlue & Spirit Challenge $34 Million In Legal Fees Over Blocked Merger

Summary

  • JetBlue and Spirit Airlines are pushing back against $34 million in legal fees related to their canceled merger.
  • The court sided with DOJ in January, leading to the cancelation of the merger and subsequent legal fee disputes.
  • JetBlue seeks to move forward independently post-merger cancelation, focusing on improved balance sheets.

JetBlue and Spirit Airlines are pushing back against law firms that are requesting for up to $34 million in legal fees. These fees are related to a lawsuit that tried to stop the airlines’ $3.8 billion merger, which was terminated in March 2024.

The news was first reported by ch-aviation. Simple Flying has asked Spirit Airlines and JetBlue Airways for a comment.

Seeking fees

According to the report, eight law firms represented 25 passengers and travel agents in an antitrust case against the merger between JetBlue and

Spirit Airlines

. The District Court for the District of Massachusetts dismissed most of the complaints for lack of legal standing, leaving only two, which led some plaintiffs to appeal.

A JetBlue Airbus A220 flying in the sky

Photo: The Global Guy | Shutterstock

In January 2024, the Massachusetts court intervened, siding with the Department of Justice (DOJ) assessment against their merger. Both airlines pursued an appeal but ultimately abandoned it, leading to the merger’s cancelation. As a result, the court dismissed the appeal from the 22 people since the merger was already canceled. However, the attorneys are now seeking fees, claiming that their legal efforts were instrumental in bringing about the merger’s collapse.

Related

Merger Blocked: What’s Next For JetBlue & Spirit Airlines

Seemingly, JetBlue and Spirit Airlines have to different futures ahead of them following a judge’s ruling against their merger.

Understanding the merger’s termination

The New York-based carrier announced in March 2024 that it officially ended its merger process with Spirit Airlines. It argued that while both airlines have remained believers in the benefits of the merger, terminating their agreement would be the best course of action for

JetBlue

and Spirit Airlines.

N682NK Spirit Airlines Airbus A321-231 (1)

Photo: Vincenzo Pace | Simple Flying

JetBlue stated that the merger agreement signed in July 2022 required the deal to be finalized by July 24, 2024. However, it became clear that the necessary conditions, such as regulatory approval, were unlikely to be met by that deadline, particularly after the DOJ won its case against the merger in January 2024.

Related

JetBlue Officially Kills Spirit Airlines Merger Agreement

While the two airlines planned to appeal the decision to block the merger, JetBlue announced it was ending its merger agreement with Spirit Airlines.

JetBlue CEO Joanna Geraghty firmly believed that the merger was a valuable opportunity because it would have established a strong low-cost and high-value competitor against the four major US airlines: American Airlines, Delta Air Lines, Southwest Airlines, and United 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.

After ending the merger plans, JetBlue’s primary goal was to improve its balance sheet by deepening its network relevance in proven areas, better segmenting its product offerings, and delivering cost savings.

Launching $2.75 billion debt sale

JetBlue is raising $2.75 billion by selling bonds and loans, with its loyalty program TrueBlue as collateral. This funding aims to increase the company’s financial reserves.

According to the statement issued on August 12, 2024, the carrier launched a private sale of $1.5 billion in senior secured notes, a $1.25 billion term loan backed by its

TrueBlue

loyalty program, and an additional $400 million through convertible notes.

Related

JetBlue In Talks For Potential $2.75 Million Debt Offering From Lender

Talks are in the preliminary stage.

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