JetBlue in deal to buy Spirit

JetBlue in deal to buy Spirit


The post JetBlue in deal to buy Spirit appeared first on TD (Travel Daily Media) Travel Daily.

JetBlue Airways has reached a $3.8bn deal to buy Spirit Airlines in a takeover that would create the fifth-largest airline in the US and remove a fast-growing budget carrier from the market.

The deal, announced on Thursday morning, caps a fierce bidding war for Spirit and came hours after Spirit scrapped plans to combine with fellow discounter Frontier Airlines. Spirit lacked the shareholder support to win approval of the Frontier merger, which was first unveiled in February.

If approved by regulators, JetBlue’s takeover of Spirit would leave Frontier as the largest discount carrier in the US. It would also be the first major US airline deal since 2016, when Alaska Airlines beat JetBlue for Virgin America. Analysts say the deal could also open the door for more consolidation among smaller carriers.

JetBlue executives say that buying Spirit would fast-track its growth by giving it access to more Airbus jetliners and pilots and help it compete with larger carriers such as American, Delta, Southwest and United, which control most of the US market. The New York-based carrier plans to refurbish Spirit’s yellow planes with sparse interiors in JetBlue style, featuring seatback screens and more legroom.

JetBlue said it will pay $33.50 a share in cash for Spirit, including a $2.50 per share prepayment if Spirit shareholders approve the deal and a 10 cent per month ticking fee starting next year until the deal closes.

The deal is expected to close in the first half of 2024, JetBlue and Spirit said in a filing. They expect to be able to fly on the same operating certificate, essentially as the same airline, in the first half of 2025, a spokeswoman said.

“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 said in an interview. “Secondly to run a reliable operation in the meantime”.

Hayes would helm the combined airline, which JetBlue said would remain headquartered in New York City.

“We have a long-term commitment to New York and we’re going to stay here”, Hayes said. But both airlines have large operations in some of Florida’s busiest airports, including Spirit’s home base of Fort Lauderdale and the tourism hub Orlando.

JetBlue’s surprise, all-cash bid for Spirit in April threw Spirit’s plan to combine with Frontier into disarray. Frontier and JetBlue then competed for Spirit, each sweetening their offers. Last month, Frontier’s CEO fretted about the lack of shareholder support for its proposed merger but called its offer “best and final”.

Spirit, based in Miramar, Florida, had repeatedly rebuffed JetBlue’s bids and said the tie-up wasn’t likely to be approved by regulators, in part because JetBlue’s alliance with American in the Northeast, which the Justice Department sued to block last year. Spirit said the deal would drive up fares and that American would wield too much control over JetBlue.

The US Justice Department didn’t immediately comment on the JetBlue-Spirit deal on Thursday. American declined to comment on the deal.

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