The fifth-largest airline in the country will be created when JetBlue purchases Spirit Airlines for $3.8 billion.
The deal was revealed on Thursday, one day after Spirit Airlines’ effort to merge with Frontier Airlines failed.
JetBlue will purchase Spirit for $33.50 in cash per share, plus a $2.50 prepayment per share that will become due after Spirit investors accept the deal. Additionally, there is a ticking cost of 10 cents every month from January 2023 till closure.
JetBlue’s all-cash offer for Spirit was much superior to the more than $2.6 billion in cash and shares that Frontier offered for Spirit.
“We believe we can uniquely be a solution to the lack of competition in the U.S. airline industry and the continued dominance of the Big Four,” JetBlue CEO Robin Hayes said in a statement in a reference to American, United, Delta and Southwest. “By enabling JetBlue to grow faster, we can go head-to-head with the legacies in more places to lower fares and improve service for everyone.
In addition to adding more than 1,700 daily flights to more than 125 destinations in 30 countries, the merged carrier will have a fleet of 458 aircraft. Regulators in charge of federal antitrust must approve the transaction.
The agreement puts an end to JetBlue and Frontier’s months-long competition for Spirit. A ferocious campaign was launched by New York-based JetBlue to persuade Spirit stockholders to turn down the Frontier offer. It succeeded, causing Spirit’s board to repeatedly postpone a vote on the Frontier plan.