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Written by David Shepherdson and Nate Raymond
WASHINGTON/BOSTON (Reuters) – JetBlue Airways and Spirit Airlines said on Friday they will appeal a federal judge’s ruling that blocked the airlines’ plans to join forces on the grounds that the proposed merger would violate U.S. antitrust laws. Announced.
The appeal comes after U.S. District Judge William Young in Boston ruled on Tuesday that JetBlue’s planned $3.8 billion acquisition of ultra-low-cost airline Spirit would be anticompetitive and harm consumers. This was done after siding with the U.S. Department of Justice.
Late Friday, the airline filed a notice of appeal to the 1st Circuit Court of Appeals against his ruling. The companies said in a statement that filing the notice of appeal is “consistent with the requirements of the merger agreement.”
The Justice Department declined to comment.
The deal comes as an appeal continues a legal battle to keep the merger alive and Spirit faces financial difficulties, including the grounding of numerous jets due to powder metal problems in its geared turbofan (GTF) engines. is necessary.
Spirit shares rose 12% in after-hours trading on Friday after receiving the notice of appeal, but are still down more than 50% since Tuesday’s ruling. JetBlue shares fell 2.6% late Friday.
Reuters earlier reported that Spirit was trying to persuade JetBlue Airways to appeal a ruling blocking a partnership between the sixth and seventh-largest U.S. airlines, according to people familiar with the discussions.
Spirit told JetBlue the contract required it to exhaust all legal options to complete the transfer and that it would have to appeal the judge’s ruling, the people said.
The appeal stems from a lawsuit brought by the Justice Department and Democratic attorneys general from six states and the District of Columbia, who argued that the merger would reduce flights and increase fares for millions of Americans. .
After a non-jury trial, Mr. Young sided with the Department of Justice, finding that the deal harmed consumers. He said this would eliminate Spirit’s low fares and ability to put pressure on other high-cost airlines.
It is unclear how long an appeal will take, but appeals against court decisions often take several months or more. JetBlue has a July deadline to complete the merger.
If the transaction is not completed by then, the parties may agree to terminate the merger or extend the closing date.
Spirit announced early Friday that it was considering refinancing options for its 2025 debt maturity due to concerns about its balance sheet, and said the merger agreement remained in place.
Spirit has struggled to return to sustainable profitability amid rising operating costs and continuing supply chain issues. This has raised concerns about the company’s ability to repay its debt, which matures next year.
This month, the company completed a series of sale-and-leaseback deals involving dozens of jets to pay down about $465 million in debt on those jets.
Following Tuesday’s ruling, some analysts said the airline may consider filing for bankruptcy to streamline its balance sheet and restructure itself into a financially strong airline.
Reuters reported on Thursday that Spirit was considering debt refinancing options and was not considering a restructuring.
(Reporting by David Shepherdson in Washington and Nate Raymond in Boston; Editing by Jonathan Ortiz, Chris Sanders, Matthew Lewis and Anna Driver)
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