Skift Take
It’s taken JetBlue four attempts to buy Spirit. Now it’s crossed the line in a deal that deserves $3.8 billion, as long as it doesn’t raise any antitrust red flags in Washington, D.C.
Matthew Parsons
It’s completion of the saga, as JetBlue Airways has now finalized an offer to purchase Spirit Airlines for $3.8 billion, just hours after the airline ended on a merger agreement with Frontier Airlines.
It first made a counterbid on April 5. Almost 4 months later, and with four revised quotes, JetBlue validated the deal on Thursday.
Its acquisition of Spirit would create the U.S.’s fifth-largest provider, with a fleet of 458 airplane and an order book of over 300 Airbus airplane.
“In the end, JetBlue won the fight. However the story might not be over yet. The merger needs approval from competitors regulators which is hardly a slam dunk,” stated Jay Shabat, senior analyst at Airline Weekly, a Skift brand.
The business anticipate to conclude the regulative procedure and close the deal no behind the first half of 2024. If lawmakers decide to block the offer, JetBlue will pay Spirit a reverse split charge of $70 million and investors of Spirit a reverse split fee of $400 million.
JetBlue is to also expand its no furlough commitment to Spirit’s team members as they join after the acquisition closes. “JetBlue is dedicated to dealing with labor leaders at both airline companies and JetBlue values committee agents to guarantee the mix supports the needs of those that run the airline,” it said in a statement.
JetBlue stated it will provide its combined 77 million clients more options and choices, which the acquisition would accelerate its natural growth strategy with more than 1,700 day-to-day flights to 125 destinations in 30 countries, based upon December 2022 schedules.
The deal also increases relevance for JetBlue in particular crucial focus cities (Fort Lauderdale, Orlando, San Juan, and Los Angeles) along with the “huge 4” airline company centers of Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta and Miami, it included.
“Purchasing Spirit provides JetBlue with more scale and removes one of its leading rivals, specifically in the large and price-sensitive Florida market,” Shabat added.
The regards to the deal includes JetBlue obtaining Spirit for $33.50 per share in money, consisting of a prepayment of $2.50 per share in money payable upon Spirit shareholders’ approval of the deal and a ticking cost of $0.10 each month starting in January 2023 through closing, for an aggregate totally watered down equity worth of $3.8 billion, and an adjusted business worth of $7.6 billion.
JetBlue anticipates to accomplish $600-700 million in net yearly synergies, and the combined business is predicted to have yearly profits of $11.9 billion, based upon 2019 revenues.
“We are excited to provide this engaging combination that turbocharges our tactical development, enabling JetBlue to bring our unique mix of low fares and extraordinary service to more customers, on more routes,” stated JetBlue CEO Robin Hayes.
This story is breaking. Stay tuned for more updates.