JetBlue casts doubt on its merger deal with Spirit Airlines

JetBlue Airways on Friday raised doubts about the future of its $3.8 billion merger deal with Spirit Airlines, saying it might be unable to meet certain conditions required as part of the agreement for unspecified reasons.

As a result, JetBlue said it had informed Spirit that the merger agreement might be terminated as early as Sunday.

Shares of Spirit were down 9.5% at $6.54 on Friday afternoon, adding to their losses of about 55% this month which were sparked by a U.S. judge’s move to block the deal. JetBlue’s shares were up 3.5% at $5.53.

JetBlue said it continues to evaluate options under the agreement and, unless the agreement is terminated, it would abide by its merger obligations. The New York-based airline could not immediately be reached for comment.

In response, Spirit said there was no basis for terminating the merger agreement. It said it would continue to abide by its obligations and was expecting JetBlue to do the same.

Without the JetBlue deal, Spirit faces a rough road ahead as the ultra-low-cost carrier has grappled with weak demand in its key markets as it seeks to return to sustainable profitability. Some analysts have even suggested the company could face bankruptcy if it cannot shore up finances.

Spirit has said it is assessing options to refinance its 2025 debt maturities, and is not pursuing or involved in a statutory restructuring.

Last week, the company said the amount of compensation it expects to receive from supplier Pratt & Whitney over several jets that were grounded would be a significant source of liquidity over the next couple of years.

Earlier this month, a U.S. judge blocked the airline’s planned merger with JetBlue, after finding that the proposed deal could threaten competition in the U.S. aviation market and harm ticket prices. Both airlines have said they will appeal the ruling.

Under the merger agreement, Jan. 28 is the deadline for the deal’s closure. If regulatory approval has not arrived by that date, there is an automatic…