The proposed merger between U.S low-cost carriers JetBlue and Spirit looks increasingly unlikely to go ahead as a federal judge has agreed with the Justice Department’s earlier assertion that the deal would harm competition and affect price-sensitive travellers.

Spirit’s stock price plummeted 47% in Tuesday’s trading, while shares in JetBlue rose 5% on what many investors might see as the best outcome for the proposed $3.8bn deal.

READ: Spirit enters in to sale-leaseback transaction for 25 aircraft

Ahead of the judgement, Spirit has freed up some liquidity by entering into a sale-leaseback agreement on 25 aircraft. Many analysts have questioned what the future holds for Spirit as it is servicing a high level of debt and hasn’t made a proifit since before the pandemic.

READ: JetBlue Spirit takeover ‘may take a long time’

Meanwhile, Robin Hayes, JetBlue’s outgoing CEO and his successor Joanna Geraghty have written to all staff acknowledged that making the merger happen would be ‘difficult in the current political environment’. and that while an appeal to the ruling would be considered in due course, ‘for now, our number one focus continues to be returning our business to profitability”.