A JetBlue plane in New York
JetBlue Airways announced Thursday a deal to acquire Spirit Airlines in a $3.8 billion transaction that has the potential to reshape the airline industry in the United States.
The news comes one day after Frontier’s bid for Spirit fell apart.
If the merger, which is highly likely to face significant antitrust scrutiny, is consummated, JetBlue would become the nation’s fifth largest carrier, after American Airlines, Delta Air Lines, Southwest Air Lines, and United Airlines.
“We believe we can uniquely be a solution to the lack of competition in the U.S. airline industry and the continued dominance of the big four,” said JetBlue CEO Robin Hayes in a statement. “By enabling JetBlue to grow faster, we can go head-to-head with the legacies in more places to lower fares and improve service for everyone.”
Spirit and Frontier had originally announced merger plans in February but that deal was called off after an extensive bidding war between JetBlue and Frontier. Ultimately, Sprit was unable to convince its shareholders to back the Frontier deal, which was almost $1 billion less than JetBlue’s.
Approval of the transaction by antitrust regulators, however, is far from guaranteed. JetBlue already faces lawsuits from regulators challenging its partnership with American Airlines at airports in New York City and Boston.
JetBlue has already agreed to pay Spirit $70 million if the deal doesn’t obtain regulatory approval as well as $400 million to shareholders. It has already promised to divest at some airports, although it would seek a limited carve-out for actions that would adversely impact its Northeast Alliance with American. One of the airports with such an overlap is Boston Logan International, which is also a major component of the alliance.
(Photo: Accura Media Group)
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