JetBlue Agrees to Buy Spirit Airlines for $3.8 Billion

July 28, 2022

American JetBlue Northeast Alliance - SkyGoFly

JetBlue announced this morning they have reached an agreement to buy no-frills budget carrier Spirit Airlines for $3.8 Billion in a merger-acquisition deal which will create the nation's fifth largest airline if it is approved by regulators.

The merger comes less than one day after Frontier Airlines announced they had ended their merger agreement with Spirit. In February 2022, the two low-cost carriers announced a plan to come together to create the nation’s largest discount airline. 

In a statement to shareholders, Frontier board chair William A. Franke expressed disappointment with the decision.

The new JetBlue-Spirit airline will be the largest discount carrier in the United States.

JetBlue Will Pay $33.50 Per Share Cash

The acquisition will be made for $33.50 per share in cash, which includes a $2.50 per share payment to Spirit shareholders upon approval, as well as a monthly 10-cent payment per month starting in January 2023 until the deal is finalized.

“We are excited to deliver this compelling combination that turbocharges our strategic growth, enabling JetBlue to bring our unique blend of low fares and exceptional service to more customers, on more routes,” said Robin Hayes, chief executive officer, JetBlue.“We look forward to welcoming Spirit’s outstanding Team Members to JetBlue and together creating a customer-centric, fifth-largest carrier in the United States. Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines...

Both airlines will continue to operate as independent, stand-alone carriers until after the transaction closes. The combined airlines will have a fleet of approximately 458 planes.

JetBlue Still Has to Get Past the Feds with Anti-Trust Gloves On...

If the deal between JetBlue and Spirit Airlines falls through due to antitrust concerns, JetBlue will have to pay Spirit a reverse break-up fee of $70 million. In addition, Spirit's shareholders will receive a reverse break-up fee of $400 million minus any amounts paid to shareholders of Spirit prior to termination.

The proposed merger still needs the required regulatory approvals, as well as approval from Spirit's stockholders. The companies anticipate that the regulatory process will be completed and the transaction will close by the first half of 2024.

What's interesting is Spirit was very much against merging with JetBlue because of antitrust concerns. I guess money talks...

The Good: JetBlue should have more firepower now against the legacy carriers when it comes to cheaper fares...something JetBlue is known for.

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