JetBlue Airways said Thursday it has reached a deal to buy Spirit Airlines, a combination that could change the airline industry by putting pressure on the nation’s four dominant airlines.
The deal, which values Spirit at $3.8 billion, would create the nation’s fifth-largest airline with a combined share of more than 10 percent of the market, behind United Airlines, which has a nearly 14 percent share.
The deal is a victory for JetBlue, which successfully thwarted a competitor’s effort to buy Spirit from Frontier Airlines. Frontier and Spirit announced plans to merge in February, but called off the deal Wednesday after struggling to convince Spirit shareholders to back the offer, which was about $1 billion lower than JetBlue’s.
“Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to drive down the prices of the big four airlines,” Robin Hayes, JetBlue’s chief executive, said in a statement.
Spirit and JetBlue said they expect to seek approval of the deal from Spirit shareholders this fall and from regulators by late 2023 or early 2024. The airlines said they expect to close the transaction no later than the first half of 2024 , with plans to start operating as a single carrier by the first half of 2025.
But although the airlines have agreed to merge, the completion of the deal is far from certain. The Biden administration has taken a hard line on antitrust, challenging corporate mergers that can reduce competition. Regulators have already sued JetBlue and American Airlines for partnering at Boston and New York airports.
Under the merger agreement, JetBlue will acquire Spirit for at least $33.50 per share in cash, significantly more than Spirit’s closing price of $24.30 on Wednesday. Shares of Spirit rose 4 percent in premarket trading but remained below the price offered by JetBlue, reflecting skepticism about the deal.
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