JetBlue Airways has reached a $3.8bn deal to buy Spirit Airlines in a takeover that will create the fifth-largest airline in the US and take away a fast-growing funds provider from the market.
The deal, introduced on Thursday morning, caps a fierce bidding battle for Spirit and got here hours after Spirit scrapped plans to mix with fellow discounter Frontier Airlines. Spirit lacked the shareholder assist to win approval of the Frontier merger, which was first unveiled in February.
If permitted by regulators, JetBlue’s takeover of Spirit would depart Frontier as the biggest low cost provider in the US. It would even be the primary main US airline deal since 2016, when Alaska Airlines beat JetBlue for Virgin America. Analysts say the deal may additionally open the door for extra consolidation amongst smaller carriers.
JetBlue executives say that purchasing Spirit would fast-track its development by giving it entry to extra Airbus jetliners and pilots and assist it compete with bigger carriers corresponding to American, Delta, Southwest and United, which management a lot of the US market. The New York-based provider plans to refurbish Spirit’s yellow planes with sparse interiors in JetBlue type, that includes seatback screens and extra legroom.
JetBlue mentioned it’s going to pay $33.50 a share in money for Spirit, together with a $2.50 per share prepayment if Spirit shareholders approve the deal and a ten cent per thirty days ticking charge beginning subsequent yr till the deal closes.
The deal is anticipated to shut in the primary half of 2024, JetBlue and Spirit mentioned in a submitting. They anticipate to have the ability to fly on the identical working certificates, basically as the identical airline, in the primary half of 2025, a spokeswoman mentioned.
“We have two priorities: one is to get this deal closed and get the airline integrated and build a bigger JetBlue”, Robin Hayes, JetBlue’s CEO mentioned in an interview. “Secondly to run a reliable operation in the meantime”.
Hayes would helm the mixed airline, which JetBlue mentioned would stay headquartered in New York City.
“We have a long-term commitment to New York and we’re going to stay here”, Hayes mentioned. But each airways have giant operations in a few of Florida’s busiest airports, together with Spirit’s house base of Fort Lauderdale and the tourism hub Orlando.
JetBlue’s shock, all-cash bid for Spirit in April threw Spirit’s plan to mix with Frontier into disarray. Frontier and JetBlue then competed for Spirit, every sweetening their provides. Last month, Frontier’s CEO fretted concerning the lack of shareholder assist for its proposed merger however known as its provide “best and final”.
Spirit, primarily based in Miramar, Florida, had repeatedly rebuffed JetBlue’s bids and mentioned the tie-up wasn’t seemingly to be permitted by regulators, in half as a result of JetBlue’s alliance with American in the Northeast, which the Justice Department sued to block final yr. Spirit mentioned the deal would drive up fares and that American would wield an excessive amount of management over JetBlue.
The US Justice Department didn’t instantly touch upon the JetBlue-Spirit deal on Thursday. American declined to touch upon the deal.