- JetBlue Airways Corporation (JBLU) and Spirit Airlines (SAVE) announced their boards approved a definitive merger agreement. This is why.
JetBlue Airways Corporation (JBLU) and Spirit Airlines (SAVE) announced that their boards of directors have approved a definitive merger agreement under which JetBlue will buy Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share in cash payable upon Spirit stockholders’ approval of the transaction and a ticking fee of $0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of $3.8 billion and an adjusted enterprise value of $7.6 billion.
More Options For Consumers Through Complementary Networks and Fleets
1.) The airline will offer its combined 77 million customers more options and choices.
2.) JetBlue will bring the JetBlue Experience to all aircraft, offering JetBlue’s unique combination of low fares and award-winning service to more customers.
3.) This acquisition will accelerate JetBlue’s organic growth plan with 1,700+ daily flights to more than 125 destinations in 30 countries based on December 2022 schedules.
4.) This acquisition will increase relevance for JetBlue in certain key cities like Fort Lauderdale, Orlando, San Juan, and Los Angeles as well as the airline hubs Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta, and Miami.
5.) The combined airline will have a fleet of 458 aircraft on a pro forma basis and an order book of over 300 Airbus aircraft with fuel-efficient, lower-carbon new engine option, or neo, engines, providing increased flexibility and efficiency while mitigating the risk of limited availability of aircraft.
Combines The Best Of The Cultures Of Both Airlines
1.) The combined airline will provide more career growth options, broader travel benefits, more opportunities to make a difference in the communities JetBlue and Spirit serve, and a deeper bench of intellectual capital to support the future growth of the airline.
2.) This deal will further job growth, including planned insourcing of Spirit’s outsourced operations in cities where JetBlue has its own Crewmembers.
3.) JetBlue will expand its no furlough commitment to Spirit’s Team Members as they are welcomed into JetBlue after closing.
4.) JetBlue will ensure a smooth transition for Spirit’s corporate Team Members by retaining a Fort Lauderdale support center along with JetBlue’s other support centers.
5.) JetBlue is committed to working with labor leaders at both airlines and JetBlue values committee representatives to ensure the combination supports the needs of those that operate the airline.
Value For Stockholders
1.) JetBlue will acquire Spirit for $33.50 to up to $34.15 per share in cash, depending on the timing of closing, including i) an accelerated prepayment of $2.50 per share in cash, payable promptly after Spirit’s stockholders approve the transaction, and ii) a ticking fee prepayment of $0.10 per share per month between January 2023 and the consummation or termination of the transaction.
a.) In the event the transaction is consummated on or before December 2023, the transaction consideration will be $33.50 per share, increasing over time to up to $34.15 per share, in the event the transaction is consummated at the outside date in July 2024.
b.) The deal consideration of $33.50 per share implies an aggregate fully diluted equity value of approximately $3.8 billion and an adjusted enterprise value of $7.6 billion.
2.) JetBlue expects to achieve $600-700 million in net annual synergies once the integration is complete, driven in large part by expanded customer offerings resulting from the greater breadth and depth of the combined network.
3.) The combined company is projected to have annual revenues of approximately $11.9 billion based on 2019 revenues. JetBlue expects the transaction to be significantly accretive to earnings per share in the first full year following closing.
4.) JetBlue expects to maintain balance sheet flexibility with post-transaction leverage of 3.0-3.5x, well inside historical levels, and to continue its deleveraging trajectory as it captures synergies.
Expands JetBlue’s Sustainability Leadership Reach
1.) The all-Airbus combined fleet would include new A220s and A320neos, proven to deliver double-digit improvements in fuel and carbon emissions. After closing, JetBlue will utilize the order book for the combined company to accelerate the fleet transition to next-generation, fuel-efficient aircraft.
2.) JetBlue expects to extend its leading climate commitments to the combined airline, including its target to achieve net-zero carbon emissions by 2040, which is 10 years ahead of the broader U.S. airline industry’s goal.
3.) JetBlue will extend its goal to convert 10% of jet fuel to sustainable aviation fuel (SAF) by 2030 to the combined airline with plans to introduce regular use of SAF into Spirit’s West Coast operations after closing.
KEY QUOTES:
“We are excited to deliver this compelling combination that turbocharges our strategic growth, enabling JetBlue to bring our unique blend of low fares and exceptional service to more customers, on more routes. We look forward to welcoming Spirit’s outstanding Team Members to JetBlue and together creating a customer-centric, fifth-largest carrier in the United States. Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines. This combination is an exciting opportunity to diversify and expand our network, add jobs and new possibilities for Crewmembers, and expand our platform for profitable growth.”
— Robin Hayes, chief executive officer, JetBlue
“Combining with Spirit will give JetBlue an even larger platform to deliver on our mission to inspire humanity. With the best Crewmembers and Team Members in the industry, our Board and leadership team look forward to building long-term sustainable value for all our stakeholders as an even stronger, more competitive low-fare airline.”
— Peter Boneparth, chair of the board, JetBlue
“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, and we look forward to working with JetBlue to complete the transaction. 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. We especially appreciate the commitment of our Spirit Family throughout this process. Today’s exciting announcement reflects JetBlue’s admiration for Spirit and a shared belief in what the combined airline can bring for our Guests.”
— Ted Christie, president and chief executive officer, Spirit
“We are pleased that the Spirit Board of Directors’ robust and diligent process has delivered additional value to our stockholders. This is a compelling combination that provides meaningful protections for stockholders against an adverse regulatory outcome with a significant cash premium that reflects the continued hard work and dedication of the Spirit Family.”
— Mac Gardner, chairman of the board, Spirit
