JetBlue Airways (B6, New York JFK) has submitted an unsolicited proposal to outright acquire Spirit Airlines (NK, Fort Lauderdale International) for USD33 per share or USD3.6 billion in total, potentially jeopardising a planned merger of Spirit Airlines with Frontier Airlines (F9, Denver International).
"The combination of JetBlue and Spirit - coupled with the incredible benefits of our Northeast Alliance with American Airlines - would be a game-changer in our ability to deliver superior value on a national scale to customers, crewmembers, communities, and shareholders. The transaction would accelerate our strategic growth and create sustained, long-term value for the stakeholders in both companies," JetBlue's Chief Executive Robin Hayes said.
The acquisition of Spirit Airlines would further strengthen JetBlue's position in two core markets, New York and Florida, but also "turbocharge" the carrier's network growth in the United States, Latin America, and the Caribbean. JetBlue's proposal assumes the discontinuation of the Spirit brand as all of its aircraft would be rebranded and retrofitted to JetBlue's specifications.
"While JetBlue and Spirit are different in many ways, we also have much in common, including a focus on keeping our costs low so we can profitably expand and offer an attractive alternative to the dominant 'Big Four' airlines. We would conduct a full review of Spirit's product offering, operational and customer technology, and talent pool to optimise the combined airline," Hayes added.
JetBlue would remain based out of New York if the acquisition goes through.
The ch-aviation fleets module shows that JetBlue currently operates eight A220-300s, 130 A320-200s, sixty-three A321-200s, seventeen A321-200NXs, four A321-200NX(LR)s, and sixty E190s (which are being replaced with the A220s) out of six bases on the US East Coast: Boston, Fort Lauderdale International, New York JFK, New York Newark, New York La Guardia, and Orlando International, and a single one on the West Coast (Los Angeles International). The airline proffers 1.1 million weekly scheduled departure seats across 7,832 weekly scheduled departures.
In turn, Spirit Airlines operates thirty-one A319-100s, sixty-four A320-200s, fifty-one A320-200Ns, and thirty A321-200s. The carrier has bases at Atlanta Hartsfield Jackson, Atlantic City, Chicago O'Hare, Dallas/Fort Worth, Detroit Metropolitan, Fort Lauderdale, Las Vegas Harry Reid, Miami International, and Orlando airports and proffers 950,000 weekly departure seats across 5,168 flights.
The two airlines operate different business models, with Spirit Airlines being a typical no-frills ultra-low-cost carrier, while JetBlue Airways is a hybrid carrier with business class onboard some of its aircraft and a wide range of complementary services, such as free Wi-Fi and snacks for passengers.
JetBlue Airways stressed that it had "strong confidence in the ability to close [the deal] in a timeline manner" as it would not need to be approved by shareholders. The carrier had USD2.8 billion in available cash at the end of 2021 and a total of USD9 billion in available funding, allowing it to finance the acquisition without drawing new capital. JetBlue estimates that the deal would bring USD600-700 million in annual savings thanks to synergies.
The unsolicited proposal threatens to throw a spanner into the works of an already proposed merger of Spirit and Frontier. In February, Frontier Airlines Holdings announced that subject approval by Spirit's shareholders, it would absorb the ULCC through a complex merger wherein existing Spirit shareholders would receive compensation comprising USD2.13 in cash and 1.9126 shares of Frontier Airlines Holdings per share they own. As of February 4, this amounted to USD25.83 per share, but as Frontier's shares have lost value since then, the current value is around USD24.93. As such, JetBlue's all-cash offer represents a 30%+ premium and is not subject to market fluctuations.
Spirit Airlines issued a laconic statement acknowledging the receipt of the bid.
"Consistent with its fiduciary duties, the Spirit Board of Directors will work with its financial and legal advisors to evaluate JetBlue's proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders. The Board will conduct this evaluation in accordance with the terms of the Company's merger agreement with Frontier and respond in due course," it said.
The ch-aviation capacities module shows that the combined JetBlue-Spirit weekly capacity would make the carrier the eighth-largest by scheduled capacity globally, although it would still trail the smallest of the US "Big Four" airlines, United Airlines, by over 1.3 million weekly scheduled seats. In contrast, the Spirit-Frontier combined capacity would place the airline as the world's eleventh-largest.
