JetBlue announces acquisition of Spirit following the failure of the Frontier deal

Offer will reach $3.8 billion but needs to be approved by US antitrust authorities

JetBlue on Thursday announced the purchase of Spirit Airlines, in a deal valued at $3.8 billion. If approved by antitrust authorities, the merger of the two companies will form a “giant” low-cost airline that will be the fifth largest US airline in market share.

The deal was announced shortly after the cancellation of the merger between Spirit and Frontier, which had reached a $2.7 billion bid for control of Spirit in February this year. Then, JetBlue began to make aggressive offers and managed to prevent the merger of rivals.

 “We look forward to welcoming Spirit’s outstanding Team Members to JetBlue and together creating a customer-centric, fifth-largest carrier in the United States,”  said Robin Hayes, chief executive officer, JetBlue.

JetBlue and Spirit together would account for about 10% of the market, putting pressure on United Airlines, which has around 13%, according to data from Statista. Delta and Southwest control 16% and 17%, respectively, while leader American Airlines has 19%.

Frontier A320

JetBlue must pay $33.50 per share of Spirit, which represents a premium of nearly 38% over the last closing price of Spirit shares. In addition, the company has offered monthly payments to Spirit shareholders, starting in January 2023, until the deal is completed.

JetBlue and Spirit expect the deal to be approved by shareholders in the coming months and by the regulatory agency in early 2024. The two carriers are expected to start operating as a single company from the second half of 2025.

The acquisition of Spirit by JetBlue is likely to give rise to legal disputes as complex agreements such as the Northeast Alliance (NEA) with American Airlines are at stake.

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