JetBlue Airways said On Thursday, it reached an agreement to buy Spirit Airlines, a combination that could reshape the airline industry by putting pressure on the country’s four dominant airlines.
The deal, which values Spirit at $3.8 billion, would create the nation’s fifth-largest airline with more than 10 percent of the market, behind United Airlines, which has a nearly 14 percent share.
The deal is a victory for JetBlue, which successfully fended off a rival bid by Frontier Airlines to buy Spirit. Frontier and Spirit announced merger plans in February, but That contract was terminated On Wednesday, Spirit fell about $1 billion short of JetBlue after struggling to convince shareholders to back its offer.
“Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to undercut the big four airlines’ fares,” JetBlue Chief Executive Robin Hayes said in a statement.
Spirit and JetBlue expect to receive approval for the deal from Spirit’s shareholders this fall and from regulators in late 2023 or early 2024, the airlines said. It will start operations as a carrier in the first half of 2025.
But even if the airlines agree to merge, closing the deal is far from certain. The Biden administration has taken a tough stance on antitrust, challenging corporate mergers that reduce competition. Regulators already exist Sued JetBlue and American Airlines through a partnership at airports in Boston and New York.
Under the Merger Agreement, JetBlue will buy Spirit for at least $33.50 per share in cash, significantly higher than Spirit’s closing price of $24.30 on Wednesday. Spirit’s shares rose 4 percent in premarket trading, but were below the price offered by JetBlue, reflecting skepticism about the deal.
