JetBlue buys Spirit for $3.8 billion after months of battle for discounter

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A JetBlue plane lands past a Spirit Airlines jet on taxiway 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 buy Spirit Airlines in an acquisition that would create the nation’s fifth largest airline and remove a burgeoning budget carrier from the market.

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

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If approved by regulators, JetBlue’s acquisition of Spirit would leave Frontier as the largest discount carrier in the US. It would also be the first major US airline deal since 2016, when Alaska Airlines defeated JetBlue for Virgin America. Analysts say the deal could also open the door for more consolidation among smaller airlines.

JetBlue executives say buying Spirit would accelerate its growth by giving it access to more Airbus jetliners and pilots and helping it compete with major airlines such as American, Delta, United and Southwest, which control most of the U.S. market. control. The New York-based airline plans to renovate Spirit’s yellow planes with sparse JetBlue-style interiors, with seatback screens and more legroom.

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JetBlue said it will pay $33.50 per share in cash for Spirit, which includes a $2.50 upfront payment if Spirit shareholders approve the deal and a 10-cent amortization fee from next year until the deal is approved.

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

JetBlue’s surprise all-cash offer for Spirit in April messed up Spirit’s plan to combine with Frontier. Frontier and JetBlue then competed for Spirit, each sweetening their offers until the Frontier deal ended Wednesday.

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Spirit went on to say it plans to continue talks to sell itself to JetBlue.

The Miramar, Florida-based airline had repeatedly rejected JetBlue’s bids, saying the partnership was unlikely to be approved by regulators, in part because of JetBlue’s alliance with American in the Northeast, which the Justice Department had sued over last year. to block.

The Justice Department did not 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 fell by 1%.