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JetBlue to purchase Spirit for $3.8 billion after months-long fight over discounter

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A JetBlue airliner lands past a Spirit Airlines jet on taxi way at Fort Lauderdale Hollywood International Airport on Monday, April 25, 2022. (Joe Cavaretta/Sun Sentinel/Tribune News Service via Getty Images)

Joe Cavaretta | Sun Sentinel | Getty Images

JetBlue Airways has reached a $3.8 billion deal to purchase Spirit Airlines in a takeover that might create the country’s fifth-largest airline and take away a fast-growing budget carrier from the market.

The airlines announced the agreement Thursday morning, hours after Spirit scrapped plans to mix with fellow discounter Frontier Airlines. Spirit lacked the shareholder support to win approval for the Frontier merger, which was first unveiled in February.

If approved by regulators, JetBlue’s takeover of Spirit would depart Frontier as the most important discount carrier within the U.S. It might even be the primary major U.S. airline deal since 2016, when Alaska Airlines beat out JetBlue for Virgin America. Analysts say the deal could also open the door for more consolidation amongst smaller carriers.

JetBlue executives say that purchasing Spirit would fast-track its growth by giving it access to more Airbus jetliners and pilots and help it compete with large carriers like American, Delta, United and Southwest, which control a lot of the U.S. market. The Recent York-based carrier plans to refurbish Spirit’s yellow planes with sparse interiors in JetBlue style, featuring seatback screens and more legroom.

JetBlue said it’s going to pay $33.50 a share in money for Spirit, including a $2.50 prepayment if Spirit shareholders approve the deal and a ten cent ticking fee starting next yr until the deal is approved.

The deal caps a months-long bidding war between JetBlue and Frontier for Spirit.

JetBlue’s surprise, all-cash bid for Spirit in April threw Spirit’s plan to mix with Frontier into disarray. Frontier and JetBlue then competed for Spirit, each sweetening their offers, until the Frontier deal was terminated Wednesday.

Spirit subsequently said it planned to proceed talks to sell itself to JetBlue.

The Miramar, Florida-based airline had repeatedly rebuffed JetBlue’s bids and said such the tie-up wasn’t more likely to be approved by regulators, partly because JetBlue’s alliance with American within the Northeast, which the Justice Department sued to dam last yr.

The Justice Department didn’t immediately comment on the deal on Thursday.

Spirit shares were up about 4% in premarket trading after the deal was announced, while JetBlue was up 1%. Frontier was down 1%.

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