A big question that arose after a federal judge blocked the merger of JetBlue Airways and Spirit Airlines last week was whether Spirit could survive.
After U.S. District Judge William Young's decision on Tuesday, veteran airline analyst Helane Becker of TD Cowen had suggested that Spirit could go to the scrapheap of failed airlines, which include Pan American, Trump Air and others.
That is, bankruptcy protection or, worse still, liquidation.
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Spirit had been urging JetBlue to appeal the decision all week.
On Friday afternoon, the two companies announced they would appeal Young's decision that coincided with the Justice Department's assertion that the $3.8 billion deal was anticompetitive.
The appeal will go to the United States Court of Appeals for the First Circuit, based in Boston.
Actions of spirit get a boost
The news sparked a 17.2% rise in Spirit. (SAVE) – Get a free report shares at $6.68 in regular trading and an additional 9.2% at $7.28 after hours.
That doesn't mean Spirit is out of trouble. The stock, as of Friday's close, is still down 59% since the end of 2023. The stock reached $84 at the end of 2014.
JetBlue (BLUE) – Get a free reportMeanwhile, on Friday it was down 1.2% to $4.99 and down 9.3% from December 29.
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Airlines are trying to merge to build more strength so they can compete against domestic giants, including American Airlines. (AAL) – Get a free reportUnited Airlines (UAL) – Get a free reportDelta Airlines (give it) – Get a free reportAlaska Airlines (ALK) – Get a free report and southwest airlines (LUV) – Get a free report.
The pandemic effect
JetBlue and Spirit have struggled, as have all airlines after Covid-19 briefly destroyed travel demand and raised fuel costs in the post-pandemic era.
You can see the fight in the five year performance of the US Global Jets exchange-traded fund (JETS) – Get a free report. The group includes airlines and related businesses around the world.
The ETF is down 4.8% this year. JetBlue represents 3% of its holdings. The ETF does not own Spirit. The ETF's largest holding is Southwest.
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