Of Opportunities and Lost Frontiers

After a protracted and acrimonious bidding-war with Frontier Airlines that included Capitol Hill-esque mud-slinging and an attempted hostile-takeover, JetBlue Airways has announced that it is merging with Spirit Airlines. The $3.8-billion deal, when complete, will give rise to America’s fifth-largest air-carrier.

Jet Blue’s pursuit of a merger with Spirit Airlines was tenacious and Machiavellian. In May 2022, after two failed attempts to acquire the Florida-based budget carrier, Jet Blue made a direct appeal to Spirit shareholders to accept its buyout offer and reject a reasonable and nearly done-deal with Frontier Airlines. Jet Blue’s attempted end run—after the fashion of its previous overtures—was rejected on account of fears federal anti-trust regulators would withhold their blessing of the merger. Whether or not the U.S. Department of Justice’s Antitrust Division will approve the proposed JetBlue-Spirit arrangement remains to be seen.

The crux of the Jet Blue’s offer is a stock value of $33.50-per share [cash] including a prepayment of $2.50-per share [cash] payable upon Spirit stockholders’ approval of the transaction and a ticking fee of $0.10-per month starting in January 2023 through closing. All told, the transaction represents an aggregate fully diluted equity value of $3.8-billion and an adjusted enterprise value of $7.6-billion.

Both carriers state they expect the deal to close no later than the first half of 2024.

If the deal closes, JetBlue asserts it plans to buy more planes, hire more pilots, and renovate Spirit’s fleet by adding additional legroom and bettering its in-flight entertainment systems.

JetBlue CEO Robin Hayes said of the agreement: “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. Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines. 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.”

Spirit Airlines president and CEO Ted Christie remarked: “We are thrilled to unite with JetBlue through our improved agreement to create the most compelling national low-fare challenger to the dominant U.S. carriers, and we look forward to working with JetBlue to complete the transaction. 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. We especially appreciate the commitment of our Spirit Family throughout this process.”

JetBlue and Spirit Airlines will continue to operate independently until after the transaction closes. The airlines’ respective loyalty programs remain unchanged and customer accounts will not be affected in any way.

Following completion of the acquisition, the composite airline will be based in New York and led by JetBlue CEO Robin Hayes.

FMI: www.ir@jetblue.com