JetBlue agrees to buy Spirit Airlines for $3.8B

JetBlue and Spirit Airlines agreed Thursday to a $3.8 billion merger that, if approved by regulators, would create the nation’s fifth largest airline.

The deal comes just a day after a potential combination between Spirit and Frontier Airlines fell apart.

Under the agreement, JetBlue will pay $33.50 per share in cash, including a prepayment of $2.50 per share in cash once Sprit stockholders approve the transaction with a ticking fee of $0.10 per month starting in January 2023 through the closing.

The two airlines, which will continue to operate independently while awaiting approval, expect the transaction to close no later than the first half of 2024.

“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.”

The combined airline, which would have a fleet of 458 aircraft, will offer its combined 77 million customers more options and choices.

“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,” said Ted Christie, president and chief executive officer, Spirit. “Bringing our two airlines together will be a game-changer.”

Airline agony

If you have traveled through Newark Liberty International Airport this spring and summer, you have almost certainly felt the pain of what the industry has been dealing with as air travel reaches pre-pandemic levels. Find out what’s causing it by clicking here.

If the deal is rejected for antitrust reasons, JetBlue will pay Spirit a reverse break-up fee of $70 million and pay Spirit stockholders a reverse break-up fee of $400 million, minus any amounts paid to them prior to termination.

JetBlue expects to achieve $600 million – $700 million in annual savings once the merger is complete. The combined company is projected to have annual revenues of nearly $12 billion.

Following the completion of the acquisition, the combined airline will be based in New York, where JetBlue is headquartered, and led by Hayes.

“Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines,” said Hayes. “This combination is an exciting opportunity to diversify and expand our network, add jobs and new possibilities for Crewmembers, and expand our platform for profitable growth.”

Here in New Jersey, JetBlue operates out of Newark Liberty International Airport in Terminals A and B while Spirit operates in Terminal B. Spirit recently won valuable takeoff and landing rights at Newark Airport that were abandoned by Southwest Airlines. Additionally, Spirit is the only airline operating out of Atlantic City International Airport. So the merger could have an especially major impact for residents in the southern half of the state.