Just over a month after a federal judge ruled that Spirit Airlines and JetBlue Airways couldn¡¯t merge in their current form, the two carriers have thrown in the towel on the merger, some 20 months after it was first announced.?

The two carriers announced the end of the merger progression in a joint statement, both expressing disappointment, as they still felt the merger would have been the best path forward for the two carriers.?

The announcement leaves each carrier to cope with its problems individually and figure out a new plan moving forward.?

Brett Snyder, founder and owner of the travel assistance firm CrankyConcierge and author of the popular aviation business blog CrankyFlier, wasn't surprised at the news.?

"This just solidifies what the airlines must have already expected would happen," he told TravelPulse. "Now they can devote 100% of their time to a standalone return to profitability, which is where the attention needs to be."

For JetBlue, that means moving forward with some initiatives for 2024 that the airline had already announced as part of its fourth-quarter earnings call: focusing on reducing costs by deferring some planned capital expenses and accelerating the phase-out of Embraer 190 aircraft, which have less favorable operating costs than the new Airbus A220 aircraft that is replacing them.?

The airline also plans to reallocate aircraft from underperforming routes to ones already proven more reliably profitable. This may notably reduce competition as JetBlue could exit markets where it has unsuccessfully competed with other carriers¡ªcreating the opposite effect of what the court's blocking of the merger was intended to achieve.?

Particular network focus will be in New York City, where JetBlue is in the midst of ¡°right-sizing¡± their operation at New York¡¯s LaGuardia Airport after winding down the ¡°Northeast Alliance¡± with American Airlines, which a federal judge ordered the two airlines to end last summer on antitrust concerns. JetBlue will also focus on growing revenue from their loyalty program, TrueBlue, and their JetBlue Vacations arm.?

JetBlue aircraft taking off. (Photo Credit: JetBlue)

The tune was similar on the Spirit Airlines earnings call, where they, too, pledged to make network adjustments that favor already-strong markets like Fort Lauderdale, and the end of service to cities struggling to earn a profit. Spirit arguably has a more tenuous path forward than JetBlue, with some industry pundits suggesting that Spirit would need to file bankruptcy to reorganize its debt.?

Spirit Airlines CEO Ted Christie called those speculations misguided during the company¡¯s earnings call, pointing to a sale-and-leaseback of several aircraft that allowed the airline to retire some $465 million in outstanding debt.?

Debt aside, Spirit continues to face a multitude of challenges. Engine issues on its fleet of Airbus aircraft have kept some aircraft on the ground, and the slow return of business travelers, while not a direct impact on Spirit (the airline's business model focuses on leisure travelers), causes business travel-dependent carriers to fight more aggressively for leisure passengers to make up the difference, which eats into Spirit's margins.?

Spirit's network is also concentrated on U.S. Domestic, Caribbean and Latin America flights, where demand has lagged longer haul destinations like Europe.

Legacy carriers United, Delta, and American have also improved at competing with ultra-low-cost carriers like Spirit by introducing lower "Basic Economy" fares with added restrictions. Because of this, travelers who would usually have flown Spirit for lower fares return to the larger airlines, which offer more perks like complimentary onboard beverages and snacks and fewer add-on fees, like the $25 it levies for having an agent print the boarding pass at the ticket counter.

The judge's ruling doesn't preclude either carrier from seeking another merger. Spirit could re-engage Frontier Airlines, which had previously announced a merger in 2022 before Spirit halted those plans in favor of a new agreement with JetBlue. Still, Frontier faces similar pressures on its own business model, making it a less attractive opportunity than it was two years ago.?

Snyder notes that Spirit's end of the merger agreement alone isn't an immediate blow to Spirit's viability, but the status quo is also untenable.

"Spirit needs to solely focus on profitability before it runs out of cash," he says, "It has time, but it needs to make a move."

---

For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.

Topics From This Article to Explore