This Tuesday afternoon (05/04) JetBlue released a new press release reporting that it has placed a proposal to buy Spirit Airlines.
The offer of the airline founded by David Neeleman is US$ 33 per share of Spirit Airlines, an amount 37% higher than the value proposed for each share by Frontier in February. The total value of the purchase is approximately US$3,6 billion.
According to JetBlue, the proposal to buy Spirit entirely is to create a strong low-cost airline in the United States, capable of even fighting with the big four. If Frontier closes the merger with Spirit, this would be the 5th largest airline in the USA, ahead of JetBlue, which is currently in this position.
The two airlines operate in the Ultra Low Cost segment, with very low cost Ryanair-style tickets. Other airlines, such as Southwest, offer greater in-flight amenities and higher prices compared to Frontier and Spirit.
“The combination of JetBlue and Spirit – along with the incredible benefits of our Northeast Alliance with American Airlines – would be a game-changer in our ability to deliver superior value on a national scale for customers, crew, communities and shareholders.” said Robin Hayes, CEO of JetBlue on Tuesday. "The transaction would accelerate our strategic growth and create sustained, long-term value for stakeholders in both companies."
Now Spirit's shareholders will have to analyze the JetBlue proposal, and decide whether to close with Frontier or the airline founded by Neeleman. We must consider that JetBlue really proposes a full purchase of the shares, while Frontier proposes a merger, where Spirit would have 49% of the shares of the resulting group.
No vote by JetBlue shareholders is required to complete the proposed transaction, which will not be subject to a financing contingency. In this way, the company says that it depends only on the approval of Spirit Airlines and regulatory bodies.
To secure payment, JetBlue said it has approximately US $ 2,8 billion of cash currently available, and a variety of unencumbered assets available to pledge as collateral for a financing, in an aggregate amount of approximately US $ 9 billion.
The combined airline is expected to have annual revenues of approximately US $ 11,9 billion based on 2019 revenues.
