Persistence bore fruit for JetBlue’s ambitious plans. On Thursday, the company announced a $3.8 billion deal to buy Spirit Airlines, which could make it the fifth-largest American airline if the deal is approved by antitrust regulators.
This news comes a day after the proposed merger between Spirit and Frontier Airlines fell apart. Spirit shareholders chose not to accept the offer from Frontier, which fell more than $1 billion short of what JetBlue proposed.
“We have two priorities: one is to get this deal closed and get the airline integrated and build a bigger JetBlue,” JetBlue CEO Robin Hayes told CNBC. “Secondly to run a reliable operation in the meantime.”
The deal will face an investigation by antitrust regulators before it is approved, with an expectation that the transaction will be finished by the first half of 2024.
If it goes through, JetBlue will acquire 458 aircraft, providing 1,700 daily flights and increasing its presence in key cities, like Los Angeles, New York and Boston, and legacy airport hubs like Miami, Las Vegas and Chicago. The airline also anticipates annual savings between $600 to $700 million, per NPR.
Fares will likely go up, according to CNN. JetBlue will justify the cost by renovating Spirit’s aircrafts and adding first class seating options.
“Spirit and Frontier play a big role in the fare you pay, even if you never fly either one,” said Scott Keyes, founder of Scott’s Cheap Flights, a website for finding cheaper fares, per CNN. “When Delta announced the basic economy fare in 2012, they described it to investors as a ‘Spirit-matching fare,’ because their lunch was getting eaten by the budget carriers of the world. I’m not a fan of either merger, but I like the JetBlue option even less.”
In the event that the deal isn’t approved, JetBlue will pay Spirit a $70 million break-up fee and Spirit’s shareholders $400 million.
When JetBlue tried to merge with American Airlines last year, the Justice Department sued to block the deal on the basis that it was anti-competition.