JetBlue has struck a deal to buy Spirit Airlines in a transaction valued at $3.8 billion, the two companies said in a joint statement, laying the foundation for the creation of a low-fare challenger to the dominant big four U.S. airlines.
JetBlue Airways Corporation and Spirit Airlines, Inc., announced on July 28 that their boards have given the green light to a definitive merger agreement, which came hours after Spirit scuttled plans to merge with fellow discount carrier Frontier Airlines.
Under the deal, which is still subject to approval by regulators and Spirit shareholders, JetBlue will buy Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share as soon as Spirit stockholders give the deal their nod of approval.
The companies said they expect the regulatory process to conclude and the transaction to close in the first half of 2024 at the latest.
In addition to the prepayment, JetBlue will also pay a ticking fee of $0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of $3.8 billion and an adjusted enterprise value of $7.6 billion, the companies said.
“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,” Robin Hayes, JetBlue CEO, said in a statement.
“Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines,” Hayes added.
The merger will establish the fifth-biggest low-cost airline in the United States.
“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 statement.
For JetBlue, merging with Spirit is the path of least resistance to acquiring Spirit’s existing planes—a fleet that will allow JetBlue to compete with the big four airlines—American, Delta, United, and Southwest.
The combined airline will have a fleet of 458 aircraft and an order book of over 300 Airbus planes, the companies said.
The conclusion of the merger will establish the fifth-largest U.S. carrier with 9 percent of market share, compared to around 13 percent for the fourth-biggest (United Airlines) and around 23 percent for the largest (Southwest).
“We believe we can uniquely be a solution to the lack of competition in the U.S. airline industry and the continued dominance of the Big Four,” Hayes said.
JetBlue and Spirit said the merger will provide customers with more options and choices, while delivering more career growth options for employees.
The deal announcement comes after a months-long bidding war between JetBlue and Frontier.
Shares of both Spirit and JetBlue were up in premarket trading following the announcement.
From The Epoch Times
