Analysts have expressed skepticism about the viability of the acquisition for JetBlue, especially considering the substantial breakup fee of $400 million to Spirit investors and $70 million to Spirit if the deal is thwarted by antitrust authorities.
The appeal is expected to be a challenging legal battle. And the option to walk away from the deal remains open for either airline if it is not completed by the deadline in July.
Spirit Up Again
Spirit shares were up 12.4% after the companies announced the appeal on Friday. JetBlue stock fell 2.2% in the same time period.
Spirit has already been in a downturn due to escalating costs and a number of grounded planes due to engine problems.
Despite the challenges, Spirit reported strong holiday travel bookings and raised its fourth-quarter revenue guidance. It is anticipated to be higher than previous estimates.
The airline is also anticipating better-than-expected operating expenses due to lower fuel costs and airport fees. Analysts from Seaport Research Partners see a potential boost for Spirit from a rebound in domestic travel in the coming year, describing its position, as precarious, but viable.
Proactive Measures
To strengthen its financial position, Spirit is considering refinancing $1.1 billion in debt. This is planned for 2025, if a path forward in the merger with JetBlue remains blocked.
