Terminal A at LaGuardia International Airport for JetBlue and Spirit Airlines in New York.
Leslie Josephs | CNBC
JetBlue Airways has reached a deal to buy Spirit Airlines, hours after the discount carrier abandoned plans to merge with Frontier Airlines.
JetBlue said it would pay $33.50 per share in cash for Spirit in a $3.8 billion deal.
Spirit’s acquisition of JetBlue would create the nation’s fifth-largest carrier and, if approved by regulators, would leave Frontier as the largest discount carrier in the U.S.
JetBlue’s surprise bid for Spirit in April called into question Spirit’s plan to combine with fellow discounter Frontier. For months, Frontier and JetBlue competed for Spirit, each sweetening their bids, until the original merger plan fell apart earlier Wednesday, clearing the way for JetBlue.
Spirit said it plans to continue negotiations to sell JetBlue after the Frontier deal ends.
JetBlue executives have argued for months that buying Miramar, Florida-based Spirit would help it compete with major carriers like American, Delta, United and Southwest, which control most of the U.S. market, and accelerate its growth. giving him access to more Airbus Jets and pilots, both of which are in short supply.
New York-based JetBlue wants to retrofit Spirit planes in JetBlue style, including seatback screens and more legroom.
Spirit previously rejected JetBlue’s offers and said such a deal was unlikely to be approved by regulators, in part because of JetBlue’s alliance with American, which the Justice Department sued to block last year.
The deal faces a major regulatory approval hurdle.
Shares of Spirit rose more than 4% in premarket trading after the deal was announced, while JetBlue rose 0.5%.
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