The fifth-largest airline in the country will be created when JetBlue purchases Spirit Airlines for $3.8 billion.
The deal was revealed on Thursday, one day after Spirit Airlines’ effort to merge with Frontier Airlines failed.
JetBlue will purchase Spirit for $33.50 in cash per share, plus a $2.50 prepayment per share that will become due once Spirit stockholders accept the deal.
Additionally, there is a ticking cost of 10 cents every month from January 2023 till closing.
JetBlue’s all-cash offer for Spirit was much superior to the more than $2.6 billion in cash and stock that Frontier offered for Spirit.
According to JetBlue CEO Robin Hayes, “We believe we can uniquely be a solution to the lack of competition in the U.S. airline market and the prolonged dominance of the Big Four.
“The Big Four are American, United, Delta, and Southwest. “By allowing JetBlue to expand more quickly, we can compete with the legacies in more locations to cut tickets and enhance service for all customers.
In addition to adding more than 1,700 daily flights to more than 125 destinations in 30 countries, the merged carrier will have a fleet of 458 aircraft.
The agreement puts an end to JetBlue and Frontier’s months-long competition for Spirit.
A ferocious campaign was launched by New York-based JetBlue to persuade Spirit stockholders to turn down the Frontier offer.
It succeeded, causing Spirit’s board to repeatedly postpone a vote on the Frontier proposal.
Once the acquisition is finished, JetBlue anticipates yearly savings of $600 million to $700 million. Based on 2019 estimates, the combined company’s annual revenue is predicted to be over $11.9 billion.
The transaction still need stockholder approval in addition to the necessary regulatory approvals.
The firms aim to consummate the acquisition and complete the regulatory procedure no later than the first half of 2024.