Summary
- JetBlue and Spirit Airlines are fighting $34 million in legal fees related to their canceled merger.
- The court ruled in favor of the Justice Department in January, leading to the annulment of the merger and a subsequent legal battle over attorney fees.
- After the merger is canceled, JetBlue wants to continue operating independently and focus on improving its balance sheets.
JetBlue and Spirit Airlines are fighting back against law firms seeking up to $34 million in legal fees related to a lawsuit that sought to stop the $3.8 billion merger of the two airlines. The lawsuit was dismissed in March 2024.
The news was first reported by ch-aviation. Simple Flying has contacted Spirit Airlines and JetBlue Airways for comment.
Collect 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 lawsuits for lack of res judicata, leaving only two, prompting some plaintiffs to appeal.
Photo: The Global Guy | Shutterstock
In January 2024, the Massachusetts court intervened and sided with the Department of Justice (DOJ) against the merger. Both airlines appealed but ultimately abandoned their appeals, resulting in the merger being overturned. As a result, the court dismissed the 22 individuals’ appeal because the merger had already been overturned. However, the lawyers are now demanding reimbursement of the fees, claiming that their legal efforts were instrumental in the merger’s failure.
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Merger blocked: What’s next for JetBlue and Spirit Airlines?
JetBlue and Spirit Airlines appear to have different futures ahead of them following a judge’s ruling against their merger.
Understanding the termination of the merger
The New York-based airline announced in March 2024 that it had officially ended its merger process with Spirit Airlines, arguing that while both airlines continue to believe in the benefits of the merger, terminating their agreement was the best course of action for JetBlue and Spirit Airlines.
Photo: Vincenzo Pace | Easy flying
JetBlue stated that the merger agreement signed in July 2022 required the deal to close by July 24, 2024. However, it became clear that the necessary conditions, such as regulatory approval, were unlikely to be met by that date, especially after the Justice Department won its case against the merger in January 2024.
Related
JetBlue officially announces merger agreement with Spirit Airlines
While the two airlines planned to appeal the decision to block the merger, JetBlue announced that it would terminate the merger agreement with Spirit Airlines.
JetBlue CEO Joanna Geraghty was convinced that the merger represented a valuable opportunity as it would provide the four major US airlines – American Airlines, Delta Air Lines, Southwest Airlines and United Airlines – with a strong low-cost, high-value competitor.
“We are proud of the work we have done with Spirit to develop a vision that challenges the status quo. However, given the remaining hurdles to closure, we have jointly decided that the interests of both airlines are better served by moving forward independently.
After the merger plans ended, JetBlue’s primary goal was to improve its balance sheet by deepening network relevance in proven areas, better segmenting its product offerings, and achieving cost savings.
Launch of a $2.75 billion debt sale
JetBlue is raising $2.75 billion through the sale of bonds and loans, using its TrueBlue loyalty program as collateral. This financing is intended to strengthen the company’s financial reserves.
According to the statement dated August 12, 2024, the airline launched a private sale of $1.5 billion of senior secured notes, a transaction financed by its TrueBlue loyalty program and an additional $400 million through convertible bonds.
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JetBlue is in talks about a possible $2.75 million debt offering
The talks are at a preliminary stage.
