JetBlue to Potentially Merge with Spirit for $3.8 Billion
JetBlue could possibly buy Spirit Airlines for $3.8 billion pending approval from US antitrust regulators. If the deal goes through it would create fifth largest airline in the U.S. That means you, LGBTQ travelers, will have another option to get to and from some of your favorite queer-friendly destinations and more!
If the deal is completed before December of 2023, stockholders will receive $33.50 per share which could potentially increase to $34.15 per share if the deal closes on the outside date of July 2024. Stockholders can expect a prepayment of $2.50 per share once they vote to approve the deal.
If the government shuts down the deal due to monopolization concerns, JetBlue will pay Spirit a reverse breakup fee of $70 million and its stockholders $400 million less any prepayments made prior to the termination of the deal.
With a combined fleet of 458 aircraft, JetBlue would enjoy approximately $700 million in annual savings pending deal approval and $11.9 billion in annual revenue based on pre-pandemic figures.
“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.” JetBlue CEO Robin Hayes said in a statement. He went on to say: “We believe we can uniquely be a solution to the lack of competition in the U.S. airline industry and the continued dominance of the big four. By enabling JetBlue to grow faster, we can go head-to-head with the legacies in more places to lower fares and improve service for everyone.”
The big four Hayes is referring to is American, United, Delta, and Southwest Airlines which control 80% of the US market. The acquisition of Spirit would help expand JetBlue’s presence in cities like Fort Lauderdale, Orlando, San Juan, and Los Angeles and enable it to grow at the hub airports of the big four in Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta, and Miami. This, if anything, will bolster JetBlue’s position to antitrust regulators who are eager to see more competition at these airports where one or two carriers hold dominion over the majority of flights.
The proposed deal with JetBlue comes just a day after the merger between Spirit and Frontier Airlines was called off. Spirit had been encouraging its stockholders to accept the lower offer from Frontier, which equated to about $25 per share, citing concerns over the rejection of the JetBlue deal from US regulators. However, the promise of a bigger payday was just too tempting for shareholders to ignore.
Regardless of it all, the US government will have the final say over the merger. There is no word yet on when we can expect a ruling.
