Business

JetBlue Airlines to Acquire Spirit for $3.6 Billion

JetBlue plans to spend $3.6 billion to buy Spirit Airlines to compete with major airlines

JetBlue executives say the acquisition of Spirit is a growth opportunity and a way to improve the company’s competition with the airline giant, but the $3.6 billion cash offer, which Spirit has called “junk”, casts doubt on the merger. The potential of the company with Frontier Airlines was announced in February. Read More [Frontier and Spirit Sign $6.6 Billion Merger Deal].

Spirit shares rose more than 22% after the news of the Jet Blue offering, but fell by more than 2%, while JetBlue and Frontier shares fell by 9% and 11%, respectively.

The triangle of conversations between the three companies indicates the extent to which mid-sized airlines are willing to integrate businesses, especially in order to compete for leisure flights at affordable prices for travelers, as this segment of the market has become more important during the Covid-19 pandemic that devastated the international and corporate travel division. Notably, Spirit and JetBlue share about 11% of the flights.

JetBlue had made a failed bid for Virgin America, which ended up merging with Alaska Airlines, and JetBlue’s bid is the only other attempt at a takeover deal in more than 22 years. Read more [Jetblue Cancels About 1,280 Flights Due to Omicron].

The merger of BlueJet and Spirit businesses will give the resulting company a total fleet of 675 aircraft by 2027 compared to the 346 aircraft that BlueJet will own by the same year if the deal is rejected. 32,000 pilots in light of the pilot shortage crisis in the United States, which is already stunting growth.

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