Spirit Airlines stock jumped on Thursday after it agreed to combine with JetBlue in a $3.8 billion deal, following months of rancor between the two carriers and discount carrier Frontier, whose own bid for Spirit fell apart a day earlier.
Airline stocks opened mixed on Thursday. The deal, which would need to be cleared by potentially-reluctant regulators, would create a new, large low-cost airline that would compete with the nation's four largest carriers. And it would give JetBlue new jets, pilots and expansion opportunities, amid what some analysts have said were otherwise limited prospects for organic growth.
JetBlue on Thursday said it and Spirit had approved a deal under which JetBlue would acquire Spirit for $33.50 per share in cash.
That deal includes a cash prepayment of $2.50 per share. That amount is payable when Spirit shareholders approve the deal. The agreement also includes a monthly prepayment of $0.10 per month starting in January through the deal's closing, expected by the first half of 2024.
"We are thrilled to unite with JetBlue through our improved agreement to create the most compelling national low-fare challenger to the dominant U.S. carriers," Spirit CEO Ted Christie said in a statement.
Rival Bids
The deal closes out more than five months of drama between the three airlines that began when Frontier and Spirit, in February, announced plans to merge. Some two months later, JetBlue stepped in with a rival bid for Spirit. Competing bids between JetBlue and Frontier followed.
Spirit, for much of that time, said it preferred to stick with Frontier. It argued that regulators might be resistant to a deal with JetBlue, given JetBlue's alliance in the northeast with American Airlines. The Justice Department has tried to block that alliance, calling it anticompetitive.
But Spirit put off a shareholder vote on the deal four times, in an effort to shore up support. And on Wednesday, Spirit finally announced that the deal with Frontier was off.
Spirit Airlines stock was up 2.8% in the stock market today. JetBlue fell 3.2%.
Among other airline stocks, Delta Air Lines fell 2.4%. American Airlines lost 4.3%. Southwest, which reported earnings on Thursday, sank 8.6%.
