Spirit Airlines Stock Descends 50% After Judge Blocks Merger With JetBlue

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A federal judge blocked JetBlue Airways (JBLU) from acquiring rival Spirit Airlines (SAVE) on Tuesday. Spirit Airlines stock crashed on the news while JBLU stock rose modestly.

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A U.S. District Judge in Boston sided with the Justice Department, finding that JetBlue’s proposed $3.8 billion acquisition of Spirit Airlines would hamper competition and raise fares for customers, Bloomberg reported.

JetBlue first announced the acquisition in July 2022, which would have created the fifth-largest airline in the U.S., according to CNBC. The Justice Department in March 2023 sued to block the deal on antitrust grounds. Last June, JetBlue divested all of Spirit’s holdings at LaGuardia Airport in New York to Frontier Airlines to soothe competition concerns.

In September, JetBlue reached an agreement with Allegiant (ALGT) to transfer the Spirit Airlines holdings at Boston Logan International Airport and the Newark Liberty International Airport, as well as five gates and related facilities at the Fort Lauderdale-Hollywood International Airport.

JetBlue expected the Spirit Airlines deal to receive regulatory approval in the first half of 2024 prior to Tuesday’s ruling.

Spirit Airlines Stock Crashes

Spirit Airlines stock tanked 50% to 7.48 Tuesday following the news, putting it on track for its worst daily drop in company history, according to MarketSmith. SAVE stock hit a record-low 5.80 intraday. The NYSE briefly halted trading on SAVE stock four times midday Tuesday with the first initiated at 12:54 p.m. ET. Trading for Spirit Airlines resumed at 1:19 p.m. ET following the most recent stoppage.

JBLU stock rallied more than 3%, with some swings up and down.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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