JetBlue Strikes Deal to Buy Spirit Airlines to Create 5th-Biggest US Carrier

An airplane model is placed on displayed Spirit Airlines and jetBlue Airways logos in an illustration taken on June 21, 2022. (Dado Ruvic/Illustrations/Reuters)

JetBlue Airways has struck a deal to buy Spirit Airlines in a transaction valued at $3.8 billion, laying the foundation for the creation of a low-fare challenger to the dominant Big Four U.S. airlines.

The companies jointly announced on July 28 that their boards have given the green light to a definitive merger agreement, which came hours after Spirit scuttled plans for a combination with fellow discount carrier Frontier Airlines.

Under the deal, which is subject to approval by regulators and Spirit shareholders, JetBlue will buy Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share that’s payable once Spirit stockholders approve the transaction.

The companies said they expect the regulatory process to conclude and the transaction to close in the first half of 2024 at the latest. The airlines will carry on independently until then, and there will be no changes to their respective loyalty programs or customer accounts.

Shares of Spirit rose 4.7 percent in midafternoon trading to $25.45, while JetBlue fell 2.4 percent to $8.22.

In addition to the prepayment, JetBlue will also pay a “ticking fee” of $0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of $3.8 billion and an adjusted enterprise value of $7.6 billion, the companies said.

Spirit Airlines planes are prepared for flight at the Fort Lauderdale–Hollywood International Airport in Fort Lauderdale, Fla., on May 16, 2022. (Joe Raedle/Getty Images)

“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,” JetBlue CEO Robin Hayes said in a statement.

“Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines.”

The merger will establish the fifth-biggest airline in the United States.

“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," Spirit President and CEO Ted Christie said in a statement.

JetBlue Airways aircraft are pictured at departure gates at John F. Kennedy International Airport in New York on June 15, 2013. (Fred Prouser/Reuters)

For JetBlue, merging with Spirit is the path of least resistance to acquiring Spirit’s existing planes—a fleet that will allow JetBlue to compete with the Big Four airlines—American, Delta, United, and Southwest.

The combined airline will have a fleet of 458 aircraft and an order book of more than 300 Airbus planes, the companies said. It will have 9 percent of market share, compared to about 13 percent for United Airlines (the fourth-largest) and around 23 percent for Southwest, which is the largest carrier.

“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,” Hayes said.

JetBlue and Spirit said the merger will provide customers with more options and choices, while delivering more career growth options for employees.

The announcement follows a months-long bidding war between JetBlue and Frontier Group. Frontier’s shares rose 15 percent to 12.99.