JetBlue and Spirit Have Reached a Deal for $3.8 Billion Merger

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JetBlue Will Buy Spirit

JetBlue Will Buy Spirit for $3.8 Billion

Yesterday, Spirit shareholders against the Frontier bid merger. The result was expected, as the vote was delayed four times. It also opened the door to JetBlue, who had a superior bid.

Now, less than 24 hours after that vote, JetBlue and Spirit have announced that their boards of directors have approved a definitive merger agreement. JetBlue will acquire Spirit for the previously announced price of 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 $0.10 per month starting in January 2023 through closing. That’s a total value of $3.8 billion and an adjusted enterprise value of $7.6 billion.

The airlines will continue to operate independently until after the transaction closes and their respective loyalty programs remain unchanged and customer accounts will not be affected in any way. Following completion of the acquisition, the combined airline will be based in New York and be led by Robin Hayes.

This deal, while approved by the boards foe now, is expected to face strong antitrust scrutiny from the US Department of Justice, which has already sued to block the Northeast Alliance between American and JetBlue.

The companies expect to conclude the regulatory process and close the transaction no later than the first half of 2024.

Merger Details

Once merged, the new airline will offer 1,700+ daily flights to more than 125 destinations in 30 countries based on December 2022 schedules. The acquisition will increase relevance for JetBlue in certain key focus cities (Fort Lauderdale, Orlando, San Juan, and Los Angeles) as well as Big Four airline hubs (Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta, and Miami).

The combined airline will have a fleet of 458 aircraft and an order book of over 300 Airbus aircraft with fuel-efficient, lower-carbon new engine option, or neo, engines. It will also employee more than 34,000 crewmembers.

Even as the fifth-largest carrier, JetBlue, with Spirit, would have only 9% market share, compared to 13% for the fourth-largest United Airlines and 23% for the largest carrier, American. After the combination and with its committed upfront divestitures, the largest seat share a combined JetBlue-Spirit will have in any of its largest metro areas is 40%, compared to the 57-91% share legacy carriers have in their largest metro areas.

DDGhttp://dannydealguru.com
Based in NYC. Points/miles enthusiast for years and actively writing about it for the last 6+ years at Danny the Deal Guru. I'm always looking out for deals. Making a few bucks is always nice, but the traveling is by far the best part of this business.

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1 COMMENT

  1. Well, this is going to be interesting. I wonder if the merger will end up getting blocked, or some divestiture being needed to gain government approval.

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