JetBlue to Buy Spirit for $3.8B

JUL 28 2022·Updated DEC 21 2022

Story

Image credit: Getty Images [via The Washington Post]

The Facts

After months of attempting to merge with Frontier Airlines and spurning purchase offers from JetBlue, Spirit accepted JetBlue's $3.8B offer on Thurs. in a deal that could create the nation's fifth-largest airline.
NPR
The all-cash deal, which they hope will receive approval from antitrust regulators and close by the first half of 2024, requires JetBlue to pay $33.50 a share, including a prepayment of $2.50 per share once Spirit stockholders approve the purchase.
NPR
It also includes a ticking fee of 10 cents per month from Jan. 2023 until the deal closes.
wapo
If the deal isn't approved by regulators, JetBlue would pay Spirit a reverse-breakup fee of $70M, plus $400M to each shareholder less any previous payments made to them.
wapo
This comes as Spirit and Frontier ended their merger attempt on Wednesday.
New York Post
Frontier, which had been negotiating to merge with Spirit since Feb., says it plans to expand as the largest low-fare airline in the US. Its share price rose 1.5% in premarket trading on Thursday.
New York Post

Sources Split

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CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

Regulators are going to have to take a close look at this deal, which undoubtedly is going to lead to one major thing for consumers: higher airfares. Even if you don't fly Spirit or Frontier, their presence on certain routes forces other airlines to lower their prices. The elimination of Spirit will remove that incentive.

CNN

Narrative B

Spirit finally came to its senses and accepted JetBlue's offer, which was much richer than anything it could've received from Frontier. Gaining regulatory approval will be difficult, but if JetBlue and Spirit make some concessions, they'll get this deal through. Then the "Big Four" will finally have some true competition.