JetBlue-Spirit Merger Is a Go for US$3.8bn

[In The News]

DALLAS – Just hours after canceling a merger agreement with Frontier Airlines (F9), JetBlue Airways (B6)has finally sealed a deal to acquire Spirit Airlines (NK) for US$3.8bn, bringing the equivalent of a reality dating show to a close.

On April 5, it made the initial counteroffer. It seems three is a charm. On Thursday, B6 announced the agreement after nearly four months and four updated offers.

With a fleet of 458 aircraft and an order book of more than 300 Airbus aircraft, the purchase would make B6 the fifth-largest carrier in the United States after acquiring Spirit.

In more detail, the airlines’ boards of directors approved a definitive merger agreement under which B6 will acquire Spirit for US$33.50 per share in cash, including a prepayment of US$2.50 per share in cash payable upon NK stockholders’ approval of the transaction and a ticking fee of US$0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of US$3.8bn and an adjusted enterprise value of US$7.6bn.

N903NK, Spirit Airlines Airbus A320NEO. Photo: Michael Rodeback/Airways

Comments from JetBlue, Spirit Officials

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“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,” said Robin Hayes, chief executive officer, JetBlue.

“Combining with Spirit will give JetBlue an even larger platform to deliver on our mission to inspire humanity,” said Peter Boneparth, chair of the board, JetBlue

“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.”

Robin Hayes, chief executive officer, JetBlue

Ted Christie, president and chief executive officer, Spirit, said, “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 are pleased that the Spirit Board of Directors’ robust and diligent process has delivered additional value to our stockholders,” said Mac Gardner, chairman of the board, Spirit.

Asper the B6 release announcing the deal, the merger would bring benefits for both customers and crews.

JetBlue Airbus A220 cabin. Photo: Kochan Kleps/Airways

Benefits for Customers

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• The airline will offer its combined 77 million customers more options and choices.
• JetBlue plans to bring the JetBlue Experience to all aircraft, offering B6’s combination of low fares and award-winning service to more customers.
• The acquisition will accelerate B6’s organic growth plan with 1,700+ daily flights to more than 125 destinations in 30 countries based on December 2022 schedules.
• The acquisition will increase relevance for B6 in certain key focus cities (Fort Lauderdale, Orlando, San Juan, and Los Angeles) as well as Big Four airline hubs (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.

N2027J, jetBlue Airways Airbus A321NEO. Photo: Michael Rodeback/Airways

Benefits for Crews

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• The combined airline will provide more career growth options, broader travel benefits, more opportunities to make a difference in the communities B6 and NK serve, and a deeper bench of intellectual capital to support the future growth of the airline.
• The mission-driven, customer-centric airline of more than 34,000 crewmembers will further job growth, including planned insourcing of Spirit’s outsourced operations in cities where JetBlue has its own Crewmembers.
• JetBlue will expand its no furlough commitment to Spirit’s Team Members as they are welcomed into B6 after closing.
• JetBlue will ensure a smooth transition for NK’s corporate Team Members by retaining a Fort Lauderdale support center, in addition to JetBlue’s other support centers.
• JetBlue is committed to working with labor leaders at both airlines and JetBlue values committee representatives to ensure the combination supports the needs of those that operate the airline.

Photo: Keith Draycott/Airways

Regulatory Approval

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The acquisition must pass the usual closing conditions, which include receiving all necessary regulatory approvals and the consent of Spirit’s investors before it can be completed.

Based on 2019 revenues, the merged company is anticipated to have annual revenues of $11.9 billion, and JetBlue anticipates realizing $600-700 million in net synergies.

The companies aim to consummate the acquisition and complete the regulatory procedure no later than the first half of 2024.

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Featured image: JetBlue N2048J Airbus A321-271NX. Photo: Andrew Henderson/Airways

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