Back in early April, JetBlue Airways announced they were throwing a wrench in Spirit Airlines’ merger with Frontier Airlines by offering Spirit’s shareholders much more money. Spirit’s board rejected the offer and JetBlue kept coming back with sweeter deals.

Everyone has a price and after five or six offers, JetBlue eventually hit the mark. And a day after Spirit Airlines officially cut ties with Frontier, JetBlue and Spirit announced today “that their boards of directors have approved a definitive merger agreement under which JetBlue will acquire Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share in cash payable upon Spirit stockholders’ approval of the transaction and a ticking fee of $0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of $3.8 billion and an adjusted enterprise value of $7.6 billion.”

Both airlines have touted their plans on Twitter and Spirit broke the news first with this tweet: “We’ve announced plans to combine with @JetBlue to deliver low fares & award-winning service to 77 million Guests on 1,700+ daily flights to over 125 destinations in 30 countries. Creating a national low-fare challenger to the dominant Big Four US airlines.”

A couple hours later, JetBlue tweeted: “We’re proud to announce JetBlue & @SpiritAirlines will come together to create a bigger, better JetBlue. After closing, we will offer 1700+ daily flights to 125+ destinations—and the low fares and award-winning service you know and love. Learn more:”

Per JetBlue’s press release:

  • The airline will offer its combined 77 million customers more options and choices.
  • JetBlue plans to bring the JetBlue Experience to all aircraft, offering JetBlue’s unique combination of low fares and award-winning service to more customers.
  • The acquisition will accelerate JetBlue’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 JetBlue 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.

In April, when news first leaked of JetBlue’s plans I wrote: “I think JetBlue customers would be excited about the news if it wasn’t for the mishandling of their operations. JetBlue has always been a fan favorite but when you strand customers for days and refuse to reimburse them for hotels or transportation and then make a $3.6 billion offer, it stings.”

The timing couldn’t have been worse but JetBlue and Spirit have really cleaned up their operations since their Spring Break debacles. They still have a lot of work to do and it will be interesting to see if the government approves this deal.

What’s interesting is to see the CEO of Spirit, Ted Christie, do an about face as he kept forcefully denying JetBlue’s offers and saying that antitrust regulators would never let it happen. Well, this morning he was on CNBC saying: “Well, a lot has been said over the last few months, obviously always with our stakeholders in mind and we’ve been listening to the folks at JetBlue and they have a lot of good thoughts on their plans for that and we’ve been learning as well so, you know, I’m actually going to let Robin, you know, jump in as well to give some views on their approach from a regulatory perspective.”

JetBlue says the airlines will act separately until the deal is approved, which is expected to be no later than the first half of 2024.


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