By Michelle Chapman
Associated Press
JetBlue will buy Spirit Airlines for $3.8 billion, creating the fifth-largest airline in the United States, they said Thursday.
The agreement was reached after an attempt to merge Spirit with Frontier Airlines failed the day before.
The combined airline will have a fleet of 458 aircraft and will be based in New York.
The two will continue to operate independently until after the merger is completed.
Their respective loyalty programs will not change and customer accounts will not be affected in any way.
JetBlue will acquire Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share in cash when Spirit shareholders approve the transaction.
There will also be a fee of 10 cents per month from January 2023 until the time of closing the transaction.
[Airlines cancel hundreds of flights before summer due to staff shortages. They are looking for 12,000 pilots for this year]
If the transaction is completed before December 2023, the deal will be $33.50 per share, increasing over time to $34.15 per share, in the event the transaction closes by the outside date of July 2024.
They prevent a woman from committing a mass shooting at Dallas Love Field airport in Texas
July 25, 202200:30
If the deal does not close for antitrust reasons, JetBlue will pay Spirit a reverse breakup fee of $70 million and Spirit shareholders a reverse breakup fee of $400 million, less amounts paid to Spirit shareholders before of termination.
[The Boeing 737 nosedived, killing 132 people. Investigators believe it was intentional: “The plane did what someone told it”]
News of the JetBlue-Spirit combination comes after weeks of wrangling between Frontier and JetBlue over who gets the low-cost airline.
Although Spirit initially reached an agreement with Frontier and stuck to that proposal, its shareholders disagreed.
Spirit and Frontier's decision to end their agreement was announced Wednesday, while Spirit shareholders were still voting on the proposal.
It was clear that, despite the support of Spirit's board of directors, shareholders were willing to reject the deal and seek a better deal with JetBlue.
Spirit Airlines planes on the tarmac at Orlando International Airport in Orlando, Florida, May 20, 2020. Chris O'Meara / AP
JetBlue anticipates annual savings of between $600 million and $700 million once the transaction is complete.
Annual revenue for the combined company is forecast to be about $11.9 billion, based on 2019 revenue.
[United Airlines offers its pilots triple salary to curb flight cancellations caused by COVID-19]
The deal still needs the necessary regulatory approvals and the approval of Spirit shareholders.
The companies expect to complete the regulatory process and close the transaction no later than the first half of 2024.
Spirit's shares were up more than 4% before the market opened, while JetBlue's were up slightly.