Topline
JetBlue on Tuesday made a nearly $3.6 billion “unsolicited offer” to purchase all outstanding shares of Spirit Airlines, Spirit announced in a news release, sending the company’s stock soaring but leaving the budget airline’s future unclear.
ORLANDO, FLORIDA, UNITED STATES – 2021/08/06: A Spirit Airlines aircraft is towed from the terminal … [+]
Key Facts
The proposed all-cash deal would value Spirit at $33 per share, far higher than the $23 implied value Spirit agreed to in February as part of a merger with Frontier Airlines.
The Frontier merger still faces a regulatory review process, and Spirit stockholders have not yet approved the move, which would combine the nation’s two biggest ultra-low-cost airlines.
Spirit’s board of directors will now “evaluate JetBlue’s proposal and pursue the course of action it determines to be in the best interests of Spirit and its stockholders,” the company said.
Spirit’s stock soared more than 28% and closed at $26.91 per share after the New York Times broke the news of JetBlue’s offer Tuesday afternoon, while JetBlue’s stock slumped about 1.8% following the news, closing at $13.64.
Key Background
The February merger announcement was billed as a shakeup to the U.S. airline industry, by creating a company that would challenge the dominance of the “Big Four” airlines: American, Delta, United and Southwest. Spirit Airlines CEO Ted Christie lauded the move at the time, saying it would result in “more consumer-friendly fares for the flying public,” though left-leaning advocacy groups lobbied the Biden Administration to block the planned merger, arguing it would reduce competition and lead to higher fares.
Surprising Fact
The Spirit-Frontier merger was touted, in part, because Spirit largely operates in the eastern United States while Frontier has a heavy presence in the west. But JetBlue, like Spirit, is an eastern-based airline. JetBlue and Spirit differ greatly in what they offer customers: Spirit is known for its low base price with numerous extra charges for add-ons, while JetBlue has higher fares that include the cost of in-flight wi-fi and allows passengers to stow a standard carry-on bag at no extra charge.
Big Number
175. That’s how many planes are in Spirit’s all-Airbus fleet. JetBlue’s 282-plane fleet is largely made up of Airbus planes.
Further Reading
JetBlue bids for Spirit Airlines, potentially spoiling Spirit’s merger with Frontier. (New York Times)
Source: https://www.forbes.com/sites/nicholasreimann/2022/04/05/jetblue-offers-to-buy-spirit-airlines-for-36-billion-throwing-planned-spirit-frontier-merger-in-doubt/