The New York-based airline announced a merger agreement with the low-cost-carrier valued at $3.8 billion, including a prepayment and ticking fee for Spirit shareholders until the deal is consummated.
JetBlue & Spirit Aim to Create “The Most Compelling National Low-Fare Challenger”
The announcement between JetBlue and Spirit comes less than one day after Frontier Airlines announced they ended the merger agreement with the Miami-area carrier. 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.
“While we are disappointed that Spirit Airlines shareholders failed to recognize the value and consumer potential inherent in our proposed combination, the Frontier Board took a disciplined approach throughout the course of its negotiations with Spirit,” Franke said in the press release. “We were focused on offering the appropriate value for Spirit, while prioritizing consumers and the best interests of Frontier, our employees and shareholders.”
Instead, JetBlue will acquire Spirit for $33.50 per share in cash, including a $2.50 per share payment to Spirit shareholders upon approval and a monthly 10-cent payment per month starting in January 2023 until the deal is finalized.
According to JetBlue, the combined carrier will serve 77 million flyers, offering over 1,700 daily flights to over 125 destinations in 30 countries. In addition, the merger will give the new JetBlue an enhanced presence at key hubs controlled by the three legacy carriers and Southwest Airlines, along with more relevance in focus cities including Orlando, Fort Lauderdale, Los Angeles and San Juan, Puerto Rico. The total fleet of 458 aircraft and orders for 300 more Airbus airframes will all be fit with the JetBlue cabin experience, including in-flight entertainment screens at all seats.
“We are thrilled to unite with JetBlue through our improved agreement to create the most compelling national low-fare challenger to the dominant U.S. carriers, and we look forward to working with JetBlue to complete the transaction,” Ted Christie, president and CEO of Spirit, said in a press release, marking a complete change in language from previous communications. “Bringing our two airlines together will be a game changer, and we are confident that JetBlue will deliver opportunities for our Guests and Team Members with JetBlue’s unique blend of low fares and award-winning service.”
The deal is expected to close in the first six months of 2024. Until then, the two airlines will operate independently.
Merger Expected to Face Heightened Scrutiny
Although JetBlue fought hard to win over Spirit, the battle may be just beginning. Although JetBlue has outlined a pathway to regulatory approval including divesting slots at airports covered under their “Northeast Alliance” with American Airlines and focusing on low-fare competition, both the Justice and Transportation Departments are expected to consider every facet of the merger. Complicating things is the ongoing antitrust lawsuit on the Northeast Alliance, which a judge is allowing to continue to be heard in court.
Source: frugal travel guy