JetBlue Airways announced that the board directors of both parties have signed a definitive merger agreement, following which the airlines will now develop a new ‘game changer’ airline.
In a statement dated July 28, 2022, JetBlue CEO Robin Hayes confirmed that JetBlue (JBLU) had won the protracted battle with its competitor Frontier Airlines. According to Hayes, the merger “turbocharges” the strategic growth of JetBlue (JBLU) and allows the carrier to offer its “unique blend of low fares and exceptional service to more customers, on more routes”.
“We look forward to welcoming Spirit’s outstanding Team Members to JetBlue (JBLU) and together creating a customer-centric, fifth-largest carrier in the United States. Spirit and JetBlue (JBLU) will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines,” Hayes said.
JetBlue (JBLU) 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.
“In the event, the transaction is consummated on or before December 2023, the transaction consideration will be $33.50 per share, increasing over time to up to $34.15 per share, in the event the transaction is consummated at the outside date in July 2024,” the statement continued.
Once the acquisition process is completed, JetBlue (JBLU) expects to achieve up to $700 million in net annual synergies and accelerate its organic growth plan with more than 1,700 daily passenger flights to over 125 destinations across 30 countries.
The merger is also expected to help the carrier increase its relevance in key focus cities, such as Fort Lauderdale (FLL), Orlando (MCO), San Juan (SJU), Los Angeles (LAX), and Las Vegas (LAS) as well as Dallas (DFW), Houston (HOU), Chicago (ORD), Detroit (DTW), Atlanta (ATL) and Miami (MIA).
The new airline is expected to merge fleets, eventually operating 458 all-Airbus planes with more than 300 Airbus jets in the order book.
“Bringing our two airlines together will be a game changer, and we are confident that JetBlue (JBLU) will deliver opportunities for our Guests and Team Members with JetBlue’s (JBLU) unique blend of low fares and award-winning service,” Spirit Airlines (S64) (SAVE) chief executive Ted Christie said.
He continued: “We especially appreciate the commitment of our Spirit Family throughout this process. Today’s exciting announcement reflects JetBlue’s (JBLU) admiration for Spirit and a shared belief in what the combined airline can bring for our Guests.”
JetBlue (JBLU) projects that the combined airline will reach annual revenues of approximately $11.9 billion.
“The final stages of the acquisition process are subject to customary closing conditions, including receipt of required regulatory approvals and approval of Spirit’s stockholders,” JetBlue (JBLU) explained.
Both parties are set to conclude the necessary regulatory steps and close the transaction before H1 2024.