The unsolicited bid came after Florida’s Spirit Airlines and Denver-based Frontier Airlines announced plans in February for a merger to create “an aggressive ultra-low fare competitor”.
JetBlue’s approach trounces Frontier’s bid for Spirit, with JetBlue offering $33 per share, a 50% premium to Spirit’s current share price. JetBlue said the offer was a “superior proposal”.
It added: “The combination of the two airlines would position JetBlue as the most compelling national low-fare challenger to the four large dominant US carriers by accelerating JetBlue’s growth and expanding the reach of the “JetBlue Effect,” which occurs when legacy carriers react to JetBlue’s unique combination of low fares and award-winning customer service.
“JetBlue triggers significantly greater fare decreases from legacy airlines when it enters a new market than when ultra-low-cost carriers enter a market.”
JetBlue said the merger with Spirit would complement its alliance with American Airlines in the northeast “by similarly expanding JetBlue’s presence nationwide”. In addition, Fort Lauderdale, where Spirit is based, is a focus airport for JetBlue, together with Orlando.
The combined network would serve more than 77 million customers annually on more than 1,700 daily flights to over 130 destinations in 27 countries “from Peru to the UK”.
“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,” said Robin Hayes, JetBlue chief executive.
JetBlue plans to finance the deal mainly with $2.8 billion of cash in hand. It is expected to deliver $600-$700 million in annual synergies when complete and produce annual revenue of around $11.9 billion.
JetBlue yesterday confirmed plans to fly to Boston from Heathrow and Gatwick this summer.
