JetBlue on Tuesday confirmed is has submitted a proposal to the Board of Directors of Spirit to acquire the airline for $33 per share in cash, implying a fully diluted equity value of $3.6 billion. The proposal represents a premium of 52 percent to Spirit’s undisturbed share price on February 4, 2022, and a premium of 50 percent to Spirit’s closing share price on April 4, 2022. JetBlue believes its proposal constitutes a “superior proposal” under Spirit’s merger agreement with Frontier and represents the most attractive opportunity for Spirit’s shareholders.
Back in February, Frontier and Spirit announced they were merging to create “America’s most competitive ultra-low fare airline.” The combined airlines would offer 1,000-plus daily flights to over 145 destinations in 19 countries. The airlines also had plans to expand with more than 350 aircraft on order, as well as eventually combining frequent flyer and membership offerings. The merger would have made the new company the fifth largest airline in America, leapfrogging JetBlue and Alaska Air.
According to JetBlue’s announcement this week, “the combination of the two airlines (JetBlue and Spirit) would position JetBlue as the most compelling national low-fare challenger to the four large dominant U.S. carriers (American, Delta, United and Southwest Airlines).” The combined company would maintain the JetBlue brand and continue to be based in New York City.
What the Acquisition Would Mean
Through its Northeast Alliance with American Airlines, JetBlue is currently experiencing significant growth in New York and Boston. In the New York area, JetBlue plans to grow from 200 to nearly 300 daily flights across JFK, LaGuardia and Newark Airports this year.
With Spirit’s existing headquarters in the Fort Lauderdale area and presence at Fort Lauderdale-Hollywood International Airport, JetBlue would have the opportunity to deepen its commitment to Florida. Both Fort Lauderdale and Orlando are JetBlue focus cities, and its JetBlue Travel Products subsidiary—which includes its JetBlue Vacations and Paisly product offerings—is also based in the Fort Lauderdale area. The combined airline would offer more than 170 daily flights at Fort Lauderdale; at Orlando International Airport, JetBlue would grow to more than 130 daily flights.
The transaction would also “turbocharge” JetBlue’s network strategy across the U.S., Caribbean and Latin America. The combined network would serve more than 77 million customers annually on more than 1,700 daily flights to over 130 destinations in 27 countries from Peru to the United Kingdom. The transaction would allow JetBlue to grow in its focus cities like Los Angeles and San Juan, as well as in hubs “where the dominant carriers control with high fares,” including Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta and Miami. The combination would introduce JetBlue for the first time to new destinations, including St. Louis, Memphis, Louisville, Atlantic City, Myrtle Beach and four additional destinations in Colombia.
The combined airline would have a fleet of 455 aircraft with 312 Airbus aircraft on order. The joint fleet would be one of the youngest and most fuel efficient in the industry, JetBlue said. With JetBlue’s Embraer E190 fleet set for retirement, a common Airbus fleet and engine commonality would simplify integration, reducing the need for additional training and offering opportunities to better utilize spares, parts and manufacturer support across both airlines.
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