Announcement comes one day after Spirit and Frontier called off merger agreement
JetBlue and Spirit Airlines have signed a merger agreement for the former to take over the low-cost carrier for $3.8 billion, the airlines announced Thursday. The deal comes one day after Spirit and Frontier Airlines called off their merger agreement. JetBlue and Frontier had been vying for Spirit since April.
If approved, the deal will create the fifth-largest airline in the United States and be a “national low-fare challenger to the dominant big four airlines.” The combined entity would be based in New York and led by JetBlue CEO Robin Hayes, according to the companies.
Under the terms of the agreement, JetBlue will acquire Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share in cash payable upon Spirit stockholders’ approval of the transaction, and a ticking fee of 10 cents per month starting in January 2023 through closing.
“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,” Hayes said in a statement.
“Bringing our two airlines together will be a game changer, and we are confident that JetBlue will deliver opportunities for our guests and team members with JetBlue’s unique blend of low fares and award-winning service,” Spirit president and CEO Ted Christie said in a statement.
The companies expect to conclude the regulatory process and close the transaction “no later than the first half of 2024,” but the deal is far from assured of gaining approval. JetBlue’s Northeast Alliance with American Airlines has a pending antitrust suit against it, with the plaintiffs calling it a “de facto merger” between the carriers in certain markets.
A U.S. judge in June said the lawsuit would go forward, and a trial in the case has been set for Sept. 26.
As part of the acquisition terms, JetBlue has committed to divest Spirit’s holdings at the Northeast Alliance airports to allow for allocation to other ultra-low-cost carriers, according to the airlines.
Copyright 2022 Northstar Travel Media, LLC. All rights reserved. From https://www.businesstravelnews.com. By Donna M. Airoldi.