JetBlue has stunned aviation industry analysts with an announcement that it plans to acquire ultra-low-cost rival Spirit Airlines in an all-cash buyout that would value Spirit at $33 per share. Spirit is already in the process of being acquired by Frontier in a friendly merger that would create the 5th largest airline in the United States.
Following a New York Times story, JetBlue publicly confirmed it had submitted to takeover proposal to the Spirit Airlines board which it claims is “superior” to the proposal submitted by Frontier.
JetBlue said it plans to fully integrate Spirit into its own brand, leaving analysts scratching their heads about how JetBlue would reposition itself among rivals. Serious questions remain over how such a proposal would clear anti-competitive hurdles imposed by the feds.
“The combination of the two airlines would position JetBlue as the most compelling national low-fare challenger to the four large dominant U.S. carriers by accelerating JetBlue’s growth,” the airline said in a statement.
Chief executive Robert Hayes also claims the deal would expand the so-called ‘JetBlue effect’ in which legacy carriers lower fares in response to whenever JetBlue enters one of their markets.
The Biden administration has set its sights on anti-competitive behavior which reduces consumer choice but Hayes argues that the JetBlue brand drives more competition between legacy carriers than when an ultra-low-cost carrier enters the same market.
“Customers shouldn’t have to choose between a low fare and a great experience, and JetBlue has shown it’s possible to have both,” commented Hayes on Tuesday.
“While JetBlue and Spirit are different in many ways, we also have much in common, including a focus on keeping our costs low so we can profitably expand and offer an attractive alternative to the dominant ‘Big Four’ airlines,” Hayes said.
“We would conduct a full review of Spirit’s product offering, operational and customer technology, and talent pool to optimize the combined airline.”
JetBlue claims the deal would deliver $600-700 million in net annual savings and generate revenues of approximately $11.9 billion.
Mateusz Maszczynski honed his skills as an international flight attendant at the most prominent airline in the Middle East and has been flying throughout the COVID-19 pandemic for a well-known European airline. Matt is passionate about the aviation industry and has become an expert in passenger experience and human-centric stories. Always keeping an ear close to the ground, Matt's industry insights, analysis and news coverage is frequently relied upon by some of the biggest names in journalism.