JetBlue told Spirit Airlines it may end its $3.8 billion takeover bid, which the United States objects to

NEW YORK — JetBlue Airways warned it may end its bid for low-cost carrier Spirit Airlines as soon as this weekend after a federal judge blocked the deal, sending Spirit shares sharply lower on Friday.

Spirit responded that it saw no reason to terminate the deal and would continue to honor its obligations, “and expects JetBlue to do the same.”

A federal judge sided with the Justice Department and blocked JetBlue's proposed $3.8 billion purchase of Spirit last week. The Justice Department sued to block the merger, saying it would raise prices by eliminating Spirit, the country's largest low-cost airline.

Both companies have submitted their intention to appeal to a higher court.

JetBlue said in a regulatory filing on Friday that it told Spirit that some terms of its deal may not be met by a deadline set in the 2022 airline agreement. JetBlue said that could lead it to terminate the deal as early as Sunday.

Spirit responded hours later with its own filing questioning JetBlue's position.

“Spirit believes there is no basis for terminating the Merger Agreement. Spirit will continue to comply with all of its obligations under the Merger Agreement, and expects JetBlue to do the same,” Spirit wrote.

Shares of Spirit Airlines Inc., based in Miramar, Florida, fell 13.4% during Friday's session, while shares of JetBlue Airways Corp. rose. By 3.6%.

New York-based JetBlue said it needed to buy Spirit to grow quickly and better compete with larger rivals that dominate the U.S. air travel market. Together, the two companies will control about 10% of the domestic air travel market, still smaller than American, Delta, United and Southwest.

Both JetBlue and Spirit have struggled financially and have been slower than some other airlines to recover from the pandemic. Since the start of 2020, JetBlue has lost $2.1 billion, and Spirit has lost $1.7 billion.

Spirit is dealing with rising costs, weak demand for its mix of ultra-low fares but high fees, and the sidelining of dozens of its Airbus planes due to problems with Pratt & Whitney engines. It must figure out how to pay off or refinance $1.1 billion in debt maturing next year.

Spirit tried to merge with Frontier Airlines, another low-cost airline, in early 2022, but JetBlue won a bidding war to push Frontier aside.

If the deal fails due to government opposition, JetBlue could pay a reverse breakup fee of $470 million, $70 million to Spirit, and $400 million to its stockholders.