If JetBlue gets clearance for $3.8 billion Spirit buyout, South Florida would lose Spirit’s home office
Broward County’s Spirit Airlines on Thursday took the first step toward being acquired by JetBlue Airways for $3.8 billion, announcing its board agreed to a deal with the New York-based airline the day after Spirit abruptly pivoted from a merger plan with Frontier Airlines when it didn’t fly with Spirit’s shareholders.
Combining discount airline Spirit with JetBlue would create the fifth-largit est U.S. airline if the transaction gains approval from the Department of Justice. That’s no sure thing, as Spirit executives said multiple times when they urged the company’s stockholders to reject JetBlue’s hostile all-cash bid, which emerged in April.
To appease regulators, JetBlue said it intends to divest some of Spirit’s holdings and assets at airports where JetBlue and its Northeastern Alliance operate in New York and Boston. JetBlue said the acquisition of Spirit would allow to operate about 1,700 daily flights to 125 destinations in 30 countries.
However, the sale to JetBlue is subject to approval by Spirit’s shareholders and federal regulators. The regulators aren’t expected to render a decision until the first half of 2024. If the deal falls through over antitrust issues, JetBlue would pay Spirit a $70 million termination fee, as well as $400 million to Spirit shareholders.
If approved, South Florida will lose a major airline headquarters. The Thursday
announcement said the combined airline will be headquartered in New York and led by JetBlue CEO Robin Hayes.
Spirit’s home office now is in Miramar — where it has been since 1999 when Spirit relocated from Detroit — as the company continues building a new corporate campus in Dania Beach closer to Fort Lauderdale-Hollywood International Airport where Spirit is the market leader. It was unclear Thursday what will happen with the planned Dania Beach office if Spirit is absorbed by JetBlue and to the 3,400 people employed by Spirit in South Florida.
After the sale closes,
Spirit said JetBlue would make a “no furlough commitment” to the airline’s employees and retain a Fort Lauderdale support center.
In 2019, Spirit announced it would build a 300,000-square-foot corporate headquarters and training center in Dania Beach. Spirit confirmed on Thursday that construction was still underway, but JetBlue officials were noncommittal in an interview with the Miami Herald about what would happen to the site if JetBlue acquires Spirit.
“We certainly expect that JetBlue will need additional training facilities and would look for the kind of office space that they’re building for what was going to be their headquarters,” said Jeff Goodell, JetBlue’s vice president of government and airport affairs, in the interview. “We’ll closely evaluate, if it makes sense to integrate those or go in a different direction.”
Until final regulatory approval, JetBlue and Spirit will continue to operate as separate airlines — meaning Spirit’s bold yellow jets will keep flying — and travelers will not be affected. If the deal is closed, Spirit noted Thursday that JetBlue expects to realize $600 million to $700 million a year in annual savings.
“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,” JetBlue’s Hayes said in a statement, referring to the legacy airlines that dominate the U.S. market: American, Delta, Southwest and United. Those airlines control about 80% of the nation’s airtravel market.
“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,” Hayes said.
Spirit and JetBlue made the announcement the morning after Spirit said it terminated a planned cashand-stock merger deal announced in February with Frontier Airlines. JetBlue flew in with its unsolicited cash bid for Spirit in April, sparking a monthslong bidding war and ultimately scuttling a Spirit-Frontier merger of discount airlines.
Spirit’s CEO and board of directors had favored the Frontier deal — until Wednesday night. They had said a merger with Denverbased Frontier was more likely to pass the regulatory approval process and Spirit CEO Ted Christie called JetBlue’s offer a “cynical attempt to disrupt our merger with Frontier.” But Spirit leadership couldn’t get enough support from Spirit shareholders, who preferred the more lucrative cash offer from JetBlue. JetBlue’s agreement to acquire Spirit landed at $33.50 per share, up to $34.15 per share in cash, depending on when the deal closes. Frontier’s cashand-stock offer had fluctuated between $2.4 million and $2.7 million.
“We are thrilled to unite with JetBlue through our improved agreement to create the most compelling national low-fare challenger to the dominant U.S. carriers,” Christie said in a statement Thursday. “Bringing our two airlines together will be a game changer, and we are confident that JetBlue will deliver opportunities for our guests and team members with JetBlue’s unique blend of low fares and award-winning service.”
While travelers might not see a JetBlue-Spirit combination for a couple of years, the announcement might lower fares. On the same day when Spirit and JetBlue announced an agreement, Frontier was in the midst of selling one million tickets starting at $19.