Zinger Key Points
- A federal district court judge blocked a merger between JetBlue and Spirit in January.
- The airlines have abandoned the merger, reasoning that they likely could not overcome the legal and regulatory challenges.
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JetBlue Airways Corporation JBLU stock is trading higher on Friday following a report suggesting Spirit Airlines is considering filing for bankruptcy.
What To Know: Back in January, a federal district court judge blocked a merger between JetBlue and Spirit, according to the Wall Street Journal. Since then, the companies have abandoned the merger, reasoning that they likely could not overcome the legal and regulatory challenges.
Currently, Spirit is in talks with bondholders and creditors regarding support for a Chapter 11 bankruptcy filing. Raymond James analyst Savanthi Syth told Reuters, “We suspect Spirit should be able to renegotiate with creditors outside of bankruptcy.”
Additionally, Spirit is planning to cut its capacity by close to 20% during the fourth quarter and has already cut dozens of flights for November and December. The company has reported losses in nearly every quarter since February 2020, according to data from Benzinga Pro.
If Spirit declares bankruptcy, JetBlue, along with other airlines, may have the chance to purchase assets from the declining company at a discount. In addition, a Spirit bankruptcy would give JetBlue the chance to attract consumers looking for budget friendly options.
Lastly, a Spirit bankruptcy would leave consumers with one less option giving remaining airlines more pricing power, especially when it comes to key domestic flights. This could result in higher revenue per flight for the surviving airlines.
How To Buy JetBlue Stock
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in JetBlue Airways JBLU's case, it is in the Industrials sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
JBLU Price Action: At the time of publication, JetBlue stock is moving 13.8% higher at $7.28, according to data from Benzinga Pro.
Image: JetBlue Photo via Wikimedia
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