JetBlue Airways and Spirit Airlines announced that their boards of directors have approved a definitive merger agreement under which JetBlue will acquire Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share in cash payable upon Spirit stockholders’ approval of the transaction and a ticking fee of $0.10 per month starting in January 2023 through closing. (A ticking fee is an increase in the per-share cash consideration payable to seller stockholders as the time period between signing and closing passes certain milestones.) The announcement came after Frontier Airlines and Spirit announced they had mutually terminated their merger agreement.
Robin Hayes, CEO of JetBlue, said the company “is excited to deliver this compelling combination that turbocharges our strategic growth, enabling JetBlue to bring our unique blend of low fares and exceptional service to more customers, on more routes.” He said the carrier looks forward to creating a customer-centric, fifth-largest carrier in the US. Ted Christie, CEO of Spirit, said bringing the two airlines together will be “a game changer.” While the issue of regulatory approval had been prominent in the struggle between JetBlue and Frontier, Hayes said the merger could be a solution to the lack of competition in the US airline industry and the continued dominance of the Big Four (American, Delta, United and Southwest). By enabling JetBlue to grow faster, he said, the company can go head-to-head with the legacy airlines in more places with lower fares and improved service. Even with the merger, he said, JetBlue will still be significantly smaller than the Big Four. Following completion of the acquisition, the combined airline will be based in New York and will be led by Hayes.