JetBlue Chief Executive Robin Hayes announced today that the carrier has agreed to buy Spirit Airlines after the latter’s attempt to merge with Frontier Airlines failed.
Earlier, Spirit Airlines had recommended its shareholders approve a lower offer from Frontier, warning that US regulators are more likely to veto the bid from JetBlue, due to possible antitrust regulations violations.
In a merger that would create the nation’s fifth largest air carrier if approved by the regulators, JetBlue will acquire Spirit Airlines for $3.8 billion.
New joint airline, which will be based in New York and led by JetBlue CEO Hayes, would have a fleet of 458 aircraft.
The deal still needs the required US regulatory approvals and go-ahead from Spirit’s stockholders. The airlines expect to finalize the regulatory process and close the deal no later than the first half of next year.
“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 said in a statement.
JetBlue Airways and Spirit Airlines will continue to operate independently until after the transaction closes.
JetBlue announced today that it would pay $33.50 per share in cash for Spirit Airlines, including a prepayment of $2.50 per share in cash payable once Spirit Airlines’ stockholders approve the transaction. There’s also a ticking fee of 10 cents per month starting in January 2023 through closing.
If the transaction is completed before December 2023, the deal will be for $33.50 per share, increasing over time to up to $34.15 per share, in the event the transaction closes at the outside date in July 2024.
If the deal fails due to possible antitrust violations, JetBlue will pay Spirit a reverse break-up fee of $70 million and stockholders of Spirit a reverse break-up fee of $400 million less any amounts paid to stockholders of Spirit prior to termination.
JetBlue projects $600-700 million in annual savings once the deal with Spirit Airlines is closed. Annual revenue for the joint airline is expected to be around $11.9 billion, based on 2019 revenues.
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