After months of back and forth, Spirit Airlines’ board of directors approved a definitive merger agreement that will see JetBlue will acquire Spirit for $33.50 per share in cash, an aggregate fully diluted equity value of $3.8 billion and an adjusted enterprise value of $7.6 billion. The announcement comes one day after Spirit said it would be terminating merger agreement with Frontier Group Holdings, Inc., parent company of Frontier Airlines.
What can travelers expect from the merger, which is expected to help JetBlue and Spirit compete with the “big four” U.S. carriers (American Airlines, Delta Air Lines, United Airlines and Southwest Airlines)?
Upon the merger, the combined company will be the fifth largest in the U.S. (JetBlue currently stands at No. 6, with Spirit just behind at No. 7), leapfrogging Alaska Airlines. JetBlue says it plans to bring the “JetBlue Experience” to all aircraft, offering JetBlue’s combination of low fares and service to more customers.
The acquisition would also accelerate JetBlue’s organic growth plan with 1,700-plus daily flights to more than 125 destinations in 30 countries, based on December 2022 schedules. It’s expected to increase relevance for JetBlue in certain key focus cities (Fort Lauderdale, Orlando, San Juan and Los Angeles) as well as “Big Four” airline hubs (such as Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta and Miami).
The combined airline will have a fleet of 458 aircraft on a pro forma basis and an order book of over 300 Airbus aircraft with fuel-efficient, lower-carbon new engine option, or Neo, engines, providing increased flexibility and efficiency while mitigating the risk of limited availability of aircraft. On that same front, JetBlue expects to extend its climate commitments to the combined airline, including its target to achieve net-zero carbon emissions by 2040, which is 10 years ahead of the broader U.S. airline industry’s goal. JetBlue would also extend its goal to convert 10 percent of jet fuel to sustainable aviation fuel (SAF) by 2030 to the combined airline, with plans to introduce regular use of SAF into Spirit's West Coast operations after closing.
The completion of the acquisition is subject to customary closing conditions, including receipt of required regulatory approvals and approval of Spirit’s stockholders. The companies expect to conclude the regulatory process and close the transaction no later than the first half of 2024.
Each airline will continue to operate independently until after the transaction closes and their respective loyalty programs remain unchanged and customer accounts will not be affected in any way. Following completion of the acquisition, the combined airline will be based in New York and be led by Robin Hayes, chief executive officer of JetBlue.
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