JetBlue and Spirit merger will create low-cost “big” within the US

Agreement was announced shortly after the union between Frontier and Spirit went down the drain

THE JetBlue announced this Thursday (28) the purchase of Spirit Airlines, in a deal valued at $3.8 billion. If approved by the antitrust authorities, the merger of the two companies will form a low-cost “giant” that will be the fifth largest US airline in terms of market share.

The agreement was announced shortly after the cancellation of the union between Spirit and Frontierwhich had reached a proposal of US$ 2.7 billion for the Spirit control in February this year. Then, JetBlue began to make aggressive offers and managed to “melt” the merger of rivals.

JetBlue and Spirit together would account for about 10% of the market, putting pressure on United Airlines, which has around 13%, according to data from Statista. Delta and Southwest control 16% and 17%, respectively, while leader American Airlines has 19%.

JetBlue must pay $33.50 per share of Spirit, which represents a premium of nearly 38% over the last closing price of Spirit shares. In addition, the company has offered monthly payments to Spirit shareholders, starting in January 2023, until the deal is completed.

JetBlue and Spirit expect the deal to be approved by shareholders in the coming months and by the regulatory agency in early 2024. The two are expected to operate as a single company from the second half of 2025.

The acquisition of Spirit by JetBlue is likely to give rise to legal disputes as complex agreements are at stake, such as the Northeast Alliance (NEA) agreement with American Airlines and even market concentration.

Source: Airway