After months of proposals and counter proposals, the Boards of JetBlue and Spirit Airlines have agreed to a definitive merger agreement, under which JetBlue will acquire Spirit for $33.50 per share in cash, creating the fifth largest airline in the U.S.
On Thursday (July 28, 2022), Spirit Airlines and JetBlue announced that their Boards have approved a definitive merger agreement, under which JetBlue will acquire Spirit for $33.50 in cash, including a prepayment of $2.50 per share in cash payable upon Spirit shareholders’ approval of the transaction, plus a ticking fee of $0.10 per month from January 2023 through closing. Depending on the timing of the closing, JetBlue will acquire Spirit for $33.50 up to $34.15. In aggregate, the deal represents a fully diluted equity value of $3.8 billion, and an adjusted enterprise value of $7.6 billion.
Once integration is completed, JetBlue expects to achieve $600-$700 million in net annual synergies, and a combined annual revenue of $11.9 billion, based on 2019 revenues. In the event that the deal is not closed due to antitrust reasons, JetBlue will pay Spirit a reverse breakup fee of $70 million and Spirit Shareholders $400 million, less any amounts paid to stockholders prior to termination. The combined airline will be based in New York and will be managed under the leadership of JetBlue’s CEO, Robin Hayes.
In today’s announcment, JetBlue’s Chief Executive Officer, Robin Hayes, said,
“We are excited to deliver this compelling combination that turbocharges our strategic growth, enabling JetBlue to bring our 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 and together creating a customer-centric, fifth-largest carrier in the United States. Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines. This combination is an exciting opportunity to diversify and expand our network, add jobs and new possibilities for Crewmembers, and expand our platform for profitable growth.
“We believe we can uniquely be a solution to the lack of competition in the U.S. airline industry and the continued dominance of the Big Four. By enabling JetBlue to grow faster, we can go head-to-head with the legacies in more places to lower fares and improve service for everyone. Even combined with Spirit, JetBlue will still be significantly smaller than the Big Four, but we’ll be much better positioned to bring the proven JetBlue Effect to many more routes and locations.”
Also commenting on the merger agreement, JetBlue’s Chairman, Peter Boneparth, said,
“Combining with Spirit will give JetBlue an even larger platform to deliver on our mission to inspire humanity. With the best Crewmembers and Team Members in the industry, our Board and leadership team look forward to building long-term sustainable value for all our stakeholders as an even stronger, more competitive low-fare airline.”
Spirit Airlines’ President and Chief Executive Officer, Ted Christie, added,
“We are thrilled to unite with JetBlue through our improved agreement to create the most compelling national low-fare challenger to the dominant U.S. carriers, and we look forward to working with JetBlue to complete the transaction. Bringing our two airlines together will be a game changer, and we are confident that JetBlue will deliver opportunities for our Guests and Team Members with JetBlue’s unique blend of low fares and award-winning service. We especially appreciate the commitment of our Spirit Family throughout this process. Today’s exciting announcement reflects JetBlue’s admiration for Spirit and a shared belief in what the combined airline can bring for our Guests.”
Further commenting on the merger agreement, Spirit Airlines’ Chairman, Mac Gardner, said,
“We are pleased that the Spirit Board of Directors’ robust and diligent process has delivered additional value to our stockholders. This is a compelling combination that provides meaningful protections for stockholders against an adverse regulatory outcome with a significant cash premium that reflects the continued hard work and dedication of the Spirit Family.”
Spirit and JetBlue expect that the combination will offer more choices and options to the airlines’ 77 million customers. JetBlue plans on bringing the ‘JetBlue Experience’ to all aircraft, with a unique combination of low fares and exceptional service. The acquisition will also accelerate JetBlue’s organic growth plan with over 1,700 daily departures to more than 125 destinations in 30 countries for December 2022. Additionally, the merger will enhance JetBlue’s relevance in key focus cities such as Fort Lauderdale, Orlando, San Juan and Los Angeles, while challenging the Big Four airlines at their hubs in Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta and Miami. The combined airline will have a fleet of 458 aircraft, and an orderbook of over 300 Airbus A220 and A320neo Family aircraft.
As part of the agreement, JetBlue will extend their ‘no furlough’ commitment to Spirit’s Team Members, ensuring a smooth transition for a combined workforce of over 34,000. JetBlue will also ensure a seamless transition for Spirit Airlines’ Miramar, Florida-based corporate team by retaining a Fort Lauderdale support center, in addition to JetBlue’s other support centers. The combined airline will have a 9% market share, compared to 13 percent for the fourth largest U.S. carrier, and 23% for the largest carrier.
Miramar, Florida-based low-cost carrier Spirit Airlines (NYSE: SAVE) is committed to offering the best value in the sky with service to destinations in the U.S., Latin America, and the Caribbean. The airline allows customers to select and pay for only the products and services they want, something they call “À La Smarte.” Spirit also operates one of the youngest and most fuel-efficient fleets in the U.S. The carrier proudly calls their youthful fleet of aircraft their “Fit Fleet®.” Spirit Airlines will add 24 new fuel-efficient Airbus A320neos to their fleet in 2022, expanding their fleet to 197 aircraft, as well as 33 new aircraft in 2023.
JetBlue is ‘New York’s Hometown Airline®’ and a leading carrier in Boston (BOS), Fort Lauderdale (FLL), Los Angeles (LAX), Orlando (MCO) and San Juan (SJU). The airline carries guests to destinations across more than 110 destinations across the U.S., Caribbean, Latin America and the United Kingdom (London Heathrow and Gatwick). JetBlue Airways Corporation trades on the NASDAQ under the ticker symbol JBLU.
In trading Thursday morning (July 28, 2022), shares in Spirit Airlines (NYSE: SAVE) were up 3.17% to $25.07/share (9:33 AM EDT), while shares in JetBlue Airways Corporation (NASDAQ: JBLU) were down 0.36% to $8.37/share (9:35 AM EDT).
Source(s): JetBlue/BUSINESS WIRE, Spirit Airlines/PRNewswire