Day After One Spirit Deal Collapses, Another Is Made

JetBlue has agreed to buy Spirit Airlines for $3.8 billion in a deal that would create the nation's fifth largest airline if approved by US regulators. The agreement Thursday comes a day after Spirit's attempt to merge with Frontier Airlines fell apart. Spirit had recommended its shareholders approve a lower offer—a cash and stock deal worth roughly $1 billion less as of just days ago, per the Wall Street Journal—from Frontier, saying that antitrust regulators are more likely to reject the bid from JetBlue, reports the AP. It has been a lengthy road to get here, with the Journal noting it seemed like JetBlue wouldn't be able to cleave the two companies, which had long toyed with the idea of combining. Ultimately, Spirit couldn't get enough shareholders on board with that plan.

"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 Robin Hayes said in a statement. The combined airline, which will be based in New York and led by Hayes, would have a fleet of 458 aircraft. The airlines will continue to operate independently until after the transaction closes. CNBC reports on JetBlue's motivation: The acquisition would accelerate its growth by opening a pathway to more Airbus planes and pilots, "both of which are in short supply." JetBlue anticipates $600 million to $700 million in annual savings once the transaction is complete. Annual revenue for the combined company is anticipated to be about $11.9 billion, based on 2019 revenues.

JetBlue said Thursday that it would pay $33.50 per share in cash for Spirit. If the deal doesn’t close due to antitrust reasons, 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. The deal still needs the required regulatory approvals and approval from Spirit’s stockholders. The companies expect to conclude the regulatory process and close the transaction no later than the first half of 2024.

(More Spirit Airlines stories.)