JetBlue agrees to buy Spirit Airlines for $3.8 billion

JetBlue has agreed to buy Spirit Airlines for $3.8 billion in a deal that would create the country’s fifth-largest airline if approved by US regulators.

Thursday’s agreement comes a day after Spirit’s failed attempt to merge with Frontier Airlines. Spirit had recommended that its shareholders approve a lower offer from Frontier, saying antitrust authorities were more likely to reject JetBlue’s offer.

“This combination is an exciting opportunity to diversify and expand our network, add jobs and new opportunities for crew members, and expand our platform for profitable growth.” JetBlue CEO Robin Hayes said in a statement.

The combined airline, based in New York and managed by Hayes, would have a fleet of 458 aircraft. The airlines will continue to operate independently until the transaction closes.

JetBlue said Thursday it would pay $33.50 per share in cash for Spirit, including an upfront payment of $2.50 per share in cash, payable once Spirit shareholders approve the transaction. There is also a 10 cent per month ticking fee from January 2023 until closure.

If the transaction closes before December 2023, the transaction will cost $33.50 per share, increasing over time to $34.15 per share if the transaction closes on the external date of July 2024.

If the transaction does not close for antitrust reasons, JetBlue will pay Spirit a reverse break-up fee of $70 million and Spirit shareholders a reverse break-up fee of $400 million, less any amounts paid to Spirit shareholders prior to termination.

News of the JetBlue-Spirit combination comes after weeks of Frontier and JetBlue wrangling over who would ultimately add the low-cost carrier to their arsenal. While Spirit initially struck a deal with Frontier and was committed to that proposed arrangement, its shareholders were not on board. Spirit and Frontier’s decision to end their deal was announced Wednesday while Spirit shareholders were still voting on the proposal. It was apparent that despite the support of Spirit’s board, shareholders were willing to reject the deal and seek a richer one from JetBlue.

JetBlue expects annual savings of $600 million to $700 million upon closing of the transaction. Annual sales of the combined company are expected to be approximately $11.9 billion based on 2019 revenues.

JetBlue and Spirit will continue to operate independently until the transaction closes. Their respective loyalty programs will remain unchanged and customer accounts will not be affected in any way.

The deal still requires necessary regulatory approvals and Spirit shareholder approval. The companies expect to complete the regulatory process and close the transaction no later than the first half of 2024.

Spirit shares are up more than 4% pre-open, while JetBlue shares are up slightly.

Copyright © 2022 by The Associated Press. All rights reserved. JetBlue agrees to buy Spirit Airlines for $3.8 billion

Alley Einstein is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button