JetBlue agrees to buy Spirit for $3.8 billion

JetBlue Airways has agreed to buy Spirit Airlines for $3.8 billion and create America’s fifth-largest airline if the deal wins approval from antitrust regulators.

Thursday’s deal capped a months-long bidding war and comes a day after Spirit’s bid to merge with budget carrier Frontier Airlines failed.

Spirit CEO Ted Christie is thrust into the awkward position of defending a sale to JetBlue after vehemently arguing against it, saying antitrust regulators would never let it happen.

“Obviously a lot has been said in the last couple of months, always with our stakeholders in mind,” Christie said on CNBC. “We’ve been listening to the folks at JetBlue, and they have a lot of good thoughts about their plans for that.”

JetBlue CEO Robin Hayes has long argued that a bigger JetBlue would create more competition for the four airlines that control about 80% of the US market: American, United, Delta and Southwest.

Shares of Miramar, Florida-based Spirit rose 3.5% at the opening bell Thursday to $25.15, still below JetBlue’s offering price. JetBlue shares were virtually flat.

Spirit Airlines regularly ends up as the worst, or close to the worst, when airlines are ranked on the rate of consumer complaints. Still, some consumer advocates worry rates will go up if it goes away.

Spirit and its similar rivals, Frontier and Allegiant, charge very low fares that appeal to more budget-conscious leisure travelers, though they add more fees that can increase the cost of flying.

“Spirit is going away, and with it, its low-cost structure,” said William McGee of the American Economic Freedoms Project, which opposes mergers. “Once Spirit is absorbed (into JetBlue), there’s no question that fares are going to go up.”

Others, however, say Frontier will grow (it has a large number of planes on order) and fill any gap left by Spirit in the cheaper segment of the air travel market.

JetBlue and Spirit will continue to operate independently until regulators and Spirit shareholders approve the deal, with their loyalty programs and customer accounts separate.

The companies said they expect to complete the regulatory process and close the transaction no later than the first half of 2024. If that happens, the combined airline would be based in JetBlue’s hometown of New York and run by Hayes. It would have a fleet of 458 aircraft.

[Con información de The Associated Press]

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