JetBlue (NASDAQ:JBLU) Soars and Spirit Airlines Plummets after Canceled Merger

The day that most expected would arrive actually did, as the merger between airline stocks JetBlue (NASDAQ:JBLU) and Spirit Airlines (NYSE:SAVE) was officially dissolved. The news was amply welcomed by JetBlue investors, who sent shares up over 4%. Meanwhile, for Spirit, it was a calamity. Shares plunged over 14% after the news emerged.

JetBlue and Spirit Airlines’ attempt to merge quickly ran afoul of regulators, who threw themselves in the path of the merger not long after it was announced. While JetBlue and Spirit maintained that their merger would allow them to better compete with larger airlines, regulators were having none of it, and ultimately, the courts sided with regulators.

Spirit and JetBlue appealed the ruling, but the appeal went nowhere, and it was clear that JetBlue wasn’t especially interested in fighting it. In fact, reports noted that JetBlue was only appealing because the terms of the merger agreement required it to stage an appeal.

A Mutual Parting

Although JetBlue seemed somewhat more reluctant to challenge the merger, it was both Spirit and JetBlue who agreed to call it quits. Both sides blamed regulators, referring to the “legal and regulatory approvals” that were “unlikely to be met” as reasons for the canceled merger. That was particularly true in light of a July 2024 deadline.

Meanwhile, the government promptly took a victory lap, with Attorney General Merrick B. Garland declaring the canceled merger a “…victory for the Justice Department’s work on behalf of American consumers.”

Which Airline Stock Is the Better Buy?

Turning to Wall Street, SAVE stock is actually the leader of these two, as its $7.50 average price target per share gives this Hold-rated stock a 35.5% upside potential. Meanwhile, fellow Hold-rated stock JBLU can only offer a 9.79% downside risk against its average price target of $6.08 per share.

Disclosure