JetBlue wins Spirit takeover battle with $3.8 billion deal

Industry:    2022-07-29

JetBlue Airways Corp prevailed in a months’ long bidding war for Spirit Airlines Inc after the ultra-low-cost carrier accepted its $3.8 billion buyout deal.

The New York-based airline clinched the deal a day after Spirit terminated its $2.7 billion merger deal with Frontier Group Holdings.

JetBlue’s shares were down 2.4%, while Spirit’s shares were up 5.4% in afternoon trade.

With a combined market share of 9%, the acquisition would create the fifth-largest U.S. airline. JetBlue expects the deal to result in $600 million-$700 million in net annual synergies and accelerate its plan to operate more than 1,700 daily flights to more than 125 destinations.

But the fate of the deal, which is expected to close no later than the first half of 2024, hinges on securing regulatory approvals. That was a reason why Spirit repeatedly spurned JetBlue’s offer.

Robin Hayes, JetBlue CEO, sounded confident of clearing regulatory hurdles and closing the transaction.

“We believe a more national JetBlue would have a very significant impact on lowering fares across the board,” he told Reuters in an interview. “In addition, we’ve offered an unprecedented set of divestiture commitments.”

The U.S. Justice Department has filed an antitrust lawsuit against American Airlines Group Inc and JetBlue over their alliance at airports in Boston and New York, arguing it would lead to higher fares.

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