2024-01-17 19:39:00
Spirit lost nearly half its market value after a federal judge agreed with the Justice Department’s position that the merger deal would harm consumers. The decision has left the company at a crossroads, with Wall Street saying Spirit’s options are to either look for another buyer or consider bankruptcy. The low-cost carrier has struggled to remain profitable amid rising operating expenses and ongoing supply chain issues, raising concerns about the company’s ability to repay its outstanding debt next year.
Several analysts indicated that the company may consider filing for bankruptcy in order to streamline its balance sheet and reorganize to become a financially sound company.
If the deal with JetBlue had been approved, it would have created the fifth largest airline in the US and given a significant boost to Spirit. To challenge the judge’s determination, many regulatory difficulties are still expected.
U.S. District Judge William Young told Jet Blue’s attorney while reviewing the merger that he expects low-cost airline fares to go up if the deal goes through and Spirit Airlines isn’t around to encourage lower prices. However, Young told the second The parties because he is having difficulty with the Ministry of Justice’s request to block the transaction in “a dynamic industry facing unique opportunities and challenges in the post-Corona environment”.
The judge then raised the possibility that Jet Blue would sell additional assets, after it had already agreed to sell departure gates and slots at airports to enable the deal and address the concerns of US regulators. The lawyers for both sides submitted their arguments to end the trial that began on the 31 In October. Last March, the Department of Justice, six US states and the District of Columbia filed a lawsuit to stop the merger, which they claim would harm competition in the airline industry. A lawsuit that ended in victory.
Spirit was among the airlines hardest hit by RTX’s Pratt & Whitney engine problems, which caused the grounding of several planes, which are expected to return to operations only this year. In addition, overcapacity in some of the company’s key markets is hurting Spirit’s pricing power and forcing the company to take bigger discounts in order to sell enough seats, making a recovery that much more difficult.
In a joint statement, the airlines said that they are examining the “next steps as part of a legal process.”
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