JetBlue Airways Corporation (JetBlue Airways) and Spirit Airlines, Inc. today announced that their boards of directors have approved a definitive merger agreement under which JetBlue will acquire 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 billion¹ and an adjusted enterprise value of $7.6 billion².

“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,” said Robin Hayes, chief executive officer, JetBlue.“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.”

“Combining with Spirit will give JetBlue an even larger platform to deliver on our mission to inspire humanity,” said Peter Boneparth, chair of the board, JetBlue. “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.”

Ted Christie, president and chief executive officer, Spirit, said, “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.”

“We are pleased that the Spirit Board of Directors’ robust and diligent process has delivered additional value to our stockholders,” said Mac Gardner, chairman of the board, Spirit. “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.”

Increases JetBlue’s relevance and offers consumers more choices by leveraging the airlines’ complementary networks and fleets

• The airline will offer its combined 77 million customers more options and choices.
• JetBlue plans to bring the JetBlue Experience to all aircraft, offering JetBlue’s unique combination of low fares and award-winning service to more customers.
• The 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.
• The acquisition will increase relevance for JetBlue in certain key focus cities (Fort Lauderdale, Orlando, San Juan, and Los Angeles) as well as Big Four airline hubs (Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta, and Miami).
• 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.

Brings together the best of both airlines’ cultures and values to create job growth and career opportunities for Crewmembers and Team Members

• 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.
• The mission-driven, customer-centric airline of more than 34,000 crewmembers will further job growth, including planned insourcing of Spirit’s outsourced operations in cities where JetBlue has its own Crewmembers.
• JetBlue will expand its no furlough commitment to Spirit’s Team Members as they are welcomed into JetBlue after closing.
• JetBlue will ensure a smooth transition for Spirit’s corporate Team Members by retaining a Fort Lauderdalesupport center, in addition to JetBlue’s other support centers.
• 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.

Delivers significant value to stockholders of both airlines

• JetBlue will acquire Spirit for $33.50 to up to $34.15 per share in cash, depending on the timing of closing, including 1) an accelerated prepayment of $2.50 per share in cash, payable promptly after Spirit’s stockholders approve the transaction, and 2) a ticking fee prepayment of $0.10 per share per month between January 2023 and the consummation or termination of the transaction.
  • 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.
  • The transaction consideration of $33.50 per share implies an aggregate fully diluted equity value of approximately $3.8 billion³ and an adjusted enterprise value of $7.6 billion⁴.
• JetBlue expects to achieve $600-700 million in net annual synergies once integration is complete, driven in large part by expanded customer offerings resulting from the greater breadth and depth of the combined network.
• 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.
• 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 the reach of JetBlue’s sustainability leadership

• 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 leverage the order book for the combined company to accelerate the fleet transition to next generation, fuel-efficient aircraft.
• JetBlue expects to extend its industry-leading climate commitments to the combined airline, including its target to achieve net zero carbon emissions by 2040, which is ten years ahead of the broader U.S. airline industry’s goal.
• JetBlue would 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.

Path to regulatory approval

The completion of the acquisition is subject to customary closing conditions, including receipt of required regulatory approvals and approval of Spirit’s stockholders. The companies expect to conclude the regulatory process and close the transaction no later than the first half of 2024.

“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,” Hayes continued. “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. Even combined with Spirit, JetBlue will still be significantly smaller than the Big Four, but we’ll be much better positioned to bring the proven JetBlue Effect to many more routes and locations.”

• The four largest carriers control more than 80% of the market. Creating a low-fare, customer-centric challenger with size and scale is the best opportunity to disrupt legacy carrier pricing in the current landscape.
• Even as the fifth-largest carrier, JetBlue, with Spirit, would have only 9% market share, compared to 13% for the fourth-largest airline and 23% for the largest carrier. After the combination and with its committed upfront divestitures, the largest seat share a combined JetBlue-Spirit will have in any of its largest metro areas is 40%, compared to the 57-91% share legacy carriers have in their largest metro areas.
• With its unique combination of everyday low fares and award-winning service, JetBlue has the best track record of disrupting legacy airlines. This has been at the heart of its approach since it first launched in 2000 with all-coach service, as it grew its much-loved brand on the East Coast and the Caribbean/Latin America, with its fresh take on transcontinental travel and premium experience with Mint, and most recently in transatlantic travel as it added flights to London.
• JetBlue’s acquisition of Spirit will give U.S. travelers the best of both worlds with a hefty boost in competition and choices as JetBlue accelerates its expansion and ultra-low-fare carriers continue to expand rapidly in number and routes.
• The Northeast Alliance (“NEA”) with American Airlines is accelerating growth of JetBlue’s low-fare service in the Northeast where Delta Air Lines and United Airlines previously had limited competition, and where JetBlue was locked out of future growth in slot-constrained and congested airports. In connection with the agreement, JetBlue has made the upfront commitment to divest Spirit’s holdings at the NEA airports to allow for allocation to other ultra-low-cost carriers.
• JetBlue has also committed to divesting Spirit assets up to a material adverse effect on the combined JetBlue-Spirit, with a limited carve-out to this divestiture obligation for actions that would be reasonably likely to materially and adversely affect the anticipated benefits under JetBlue’s NEA. In the unlikely event the proposed agreement is not consummated for antitrust reasons, JetBlue will pay (i) Spirit a reverse break-up fee of $70 million and (ii) stockholders of Spirit a reverse break-up fee of $400 million less any amounts paid to stockholders of Spirit prior to termination.

JetBlue and Spirit will continue operating independently until closing

The airlines will continue to operate independently until after the transaction closes and their respective loyalty programs remain unchanged and customer accounts will not be affected in any way.

Following completion of the acquisition, the combined airline will be based in New York and be led by Robin Hayes.

As previously announced, Spirit has terminated its prior merger agreement with Frontier. JetBlue has terminated its previously announced all-cash tender offer to acquire Spirit common stock.

Spirit Airlines brand will eventually disappear under this proposed acquistion.

Spirit Airlines aircraft photo gallery:

JetBlue Airways issued the following statement from Robin Hayes, chief executive officer, regarding the decision by the Spirit Airlines’ Board of Directors to adjourn its special meeting:

We are encouraged by our discussions with Spirit and are hopeful they now recognize that Spirit shareholders have indicated their clear, overwhelming preference for an agreement with JetBlue.

We strongly recommend that Spirit shareholders continue to let the Spirit Board know they want to receive the superior value JetBlue has proposed, by voting AGAINST the Frontier transaction.

JetBlue Airways has issued the following statement from Robin Hayes, chief executive officer, regarding the decision by the Spirit Airlines’ Board of Directors to adjourn its special meeting:

We compliment the Spirit Board for listening to their shareholders, who clearly were not supportive of the Frontier transaction, and adjourning the Special Meeting. We look forward to commencing a constructive and substantive dialogue with them.

It’s clear that Spirit shareholders have now handed the Spirit Board an undeniable mandate to reach an agreement with JetBlue. The Spirit Board has so far not walked away from the Frontier transaction and we continue to strongly recommend that Spirit shareholders let the Spirit Board know that preventing their shareholders from receiving the superior value JetBlue has proposed is unacceptable, by voting AGAINST the Frontier transaction.

A combined JetBlue-Spirit would create a truly compelling national competitor to the legacy carriers and a winning combination for customers, JetBlue crewmembers and Spirit Team Members, and shareholders of both airlines. We urge the Spirit Board to listen to its shareholders and accept our superior proposal without further delay.

JetBlue Airways today issued an open letter to shareholders of Spirit Airlines:

The full letter follows:

Dear Spirit Shareholders,

Tomorrow, Spirit shareholders have YOUR chance to help assure you receive the most value for your Spirit shares by voting AGAINST the Frontier transaction.

If you want more value and more certainty, sooner, your choice is clear. By voting AGAINST the Frontier transaction you vote FOR:

• A superior all-cash price of at least $33.50 per Spirit share, a premium of 51% to the implied value of the Frontier transaction as of June 28, 2022;

• An accelerated payment of $2.50 per Spirit share – or 13% more than Frontier’s prepayment;

• Greater regulatory commitments, including a larger reverse break-up fee of $400 million and a more significant divestiture commitment than Frontier, despite similar regulatory profiles; and

• A ticking fee – a monthly prepayment of $0.10 per share from January 2023 until the deal is consummated or terminated.

In fact, Spirit shareholders would receive more cash in the unlikely event a JetBlue deal is terminated ($4.30 per share assuming the ticking fee is paid in full) than they would receive if the Frontier transaction is consummated ($4.13 per share).

Ultimately, however you assess the probability of regulatory approval of each transaction, you are always better off with the JetBlue transaction.

• As one of Spirit’s top ten shareholders said, “We firmly believe that if, as shareholders, we must wait for a transaction to be consummated following a lengthy regulatory process, we are much better off waiting alongside JetBlue, which is willing to compensate us along the way. The Board’s self-serving actions and failure to accept JetBlue’s $33.50 per share offer is preventing shareholders from receiving superior value.”

Only by voting AGAINST the Frontier transaction can you assure that you will receive the benefits of our offer.

The entrenched Spirit Board needs to know that you, their shareholders, want our better offer.

• Multiple Spirit directors have significant ties to Frontier’s controlling shareholder, Bill Franke,resulting in a conflicted Spirit Board more focused on securing an inferior transaction with Frontier than maximizing value for its own shareholders.

• While negotiating for eight months with Frontier, Spirit’s Board never seriously considered any alternatives, resulting in an original merger agreement with Frontier that was clearly suboptimal, with a low premium, no reverse break-up fee, and no divestiture commitment. Frontier has improved its offer twice only because we launched our “vote no” campaign.

• The Spirit Board consistently ignored or refused to engage with JetBlue until faced with certain defeat on the original shareholder meeting date and then, in an attempt to avoid the widespread perception of its poor corporate governance, pretended to engage with JetBlue.

• The Spirit Board continues to forgo any engagement or good faith negotiation with JetBlue, publicly rejecting our latest proposal in less than a day without ever discussing the amended terms.

Don’t let the Spirit Board’s allegiances to Frontier’s controlling shareholder keep you from the most value creating opportunity. This is the time to make your voice heard and deliver a clear message to the entrenched Spirit Board that you want the superior JetBlue transaction.

Vote AGAINST the Frontier transaction today.

Sincerely,

Robin Hayes
Chief Executive Officer

JetBlue Airways has announced that it is modifying its proposal to acquire Spirit Airlines based on discussions with Spirit shareholders, and issued an open letter detailing the benefits of its decisively superior proposal and the recent misleading statements made by Spirit. JetBlue is communicating the modified proposal to Spirit’s Board.

JetBlue continues to encourage Spirit shareholders to vote AGAINST Frontier’s inferior offer. After engagement and consultation with shareholders and positive investor reaction to the value and certainty of JetBlue’s offer, JetBlue today amended its already superior proposal:

• Increased accelerated prepayment to $2.50 per share, structured as a cash dividend to Spirit shareholders promptly following the Spirit shareholder vote approving the combination between Spirit and JetBlue (subject to CARES Act limitations).

• Enhanced reverse break-up feeof $400 million payable to Spirit in the unlikely event the transaction is not consummated for antitrust reasons.

• Addition of a ticking fee mechanism, which would provide shareholders with a monthly prepayment of $0.10per share between January 2023 and the consummation or termination of the transaction. This represents an estimated aggregate ticking fee of up to $1.80 per share, of which the first $1.15 per share in payments will offset the reverse break-up fee or the merger consideration. Any payments in excess of the $1.15 per share will be incremental to the total purchase price of $33.50 or the reverse break-up fee. This increases the total transaction consideration to up to $34.15 per share in the event the transaction is consummated and total downside protection to $4.30 per share, or approximately $470 million in the aggregate, in the event the transaction is terminated.

“After the Spirit Board’s failure to recognize our decisively superior offer, we’ve discussed our offer directly with Spirit shareholders and are now modifying our proposal in response to shareholders’ expressed interest, to include a monthly payment for shareholders, with the certainty of a significant cash premium at closing,” said Robin Hayes, chief executive officer, JetBlue. “Spirit shareholders should not be misled by Spirit and Frontier’s rosy projections of a potential future stock price, which are based on highly flawed assumptions that fail to account for the actual market conditions, including the need for pilot pay increases and elevated fuel costs. The entrenched Spirit Board has approved a revised deal that is ultimately better for Frontier and its controlling shareholder than it is for Spirit shareholders.”

The full letter follows:

Dear Spirit Shareholders,

After the conflicted Spirit Board failed to recognize our decisively superior proposal, we have continued to engage with shareholders who are supportive of our superior proposal and we are now modifying our already superior proposal with the following:

• Increased accelerated prepayment to $2.50 per share, structured as a cash dividend to Spirit shareholders promptly following the Spirit shareholder vote approving the combination between Spirit and JetBlue (subject to CARES Act limitations).

• Enhanced reverse break-up feeof $400 million payable to Spirit in the unlikely event the transaction is not consummated for antitrust reasons.

• Addition of a ticking fee mechanism, which would provide shareholders with a monthly prepayment of $0.10per share between January 2023 and the consummation or termination of the transaction. This represents an estimated aggregate ticking fee of up to $1.80 per share, of which the first $1.15 per share in payments will offset the reverse break-up fee or the merger consideration. Any payments in excess of the $1.15 per share will be incremental to the total purchase price of $33.50 or the reverse break-up fee. This increases the total transaction consideration to up to $34.15 per share in the event the transaction is consummated and total downside protection to $4.30 per share, or approximately $470 million in the aggregate, in the event the transaction is terminated.

The facts demonstrate that our offer to acquire Spirit remains decisively superior to the recently amended Frontier transaction. Yet, the entrenched Spirit Board is clinging to the inferior Frontier transaction with pie-in-the-sky promises and an overly simplistic regulatory argument. Their pitch to shareholders simply doesn’t add up.

JetBlue offers more value and certainty to Spirit shareholders, while the Spirit Board continues to mislead its own shareholders:

• Superior all-cash price of at least $33.50per Spirit share representing a substantial premium of 52.1% above the implied value of the amended Frontier transaction and guaranteeing certain value.

• Offers Spirit shareholders more value under any scenario and better trading value in the short term. As we predicted in our release on Friday night, the dilution from incremental leverage embedded in the Frontier amended merger agreement put pressure on the Spirit stock. On the other hand, the rejection of the Frontier transaction will result in a higher price for Spirit stock, even before any consideration of the likelihood of JetBlue’s transaction closing.

Spirit’s Board has made a lot of lofty promises to secure “yes” votes from investors, but here’s what the Spirit Board and Frontier management do NOT tell you:

• Shareholders should not be fooled by Spirit’s and Frontier’s rosy projections of $50 per share. Spirit shareholders are being promised an unrealistic future value based on financial projections that are a house of cards given the realities of the market. Among other things, they want you to believe in assumptions that fail to account for the actual market conditions they would face, including the need for pilot pay increases and elevated fuel costs. In a recent message, the Spirit’s pilot union, ALPA, said it was “deeply troubled” that Spirit had not planned a single dollar for increased pilot wages for the next five years, even as Spirit’s pilot attrition has skyrocketed.When using realistic adjustments and accounting for time value of money, the present value of Spirit’s future share price is between $20-30; a clear discount to the $33.50 in cash offered by JetBlue.

• Since our updated proposal on June 6 through June 24, the Spirit stock price increased by 18%; on June 27, the first day of trading since the announcement of the amended Frontier merger agreement, the Spirit stock declined by 8%.

• Spirit shareholders are effectively paying for half of the recent improvement in the terms of the Frontier transaction. While the Spirit Board presents Frontier’s revised transaction as a $2 per share improvement in headline price, in reality, it is only about $1 of incremental economic value. Spirit shareholders will own approximately 50% of the combined company and, as a result, are effectively funding half of this improvement in cash consideration as it is being financed through debt taken on by the combined company. As a result, the implied market value of the Frontier transaction is now ($22.03) LOWER than it was on Friday ($22.29), before their supposed improvement. Frontier is taking this value out of your pocket to fund part of their payment to you.

• Frontier and Spirit would have you believe their transaction will sail through antitrust approval, but that confidence is either naive or disingenuous. Outside experts agree that, within the current administration, our transaction has a similar chance as Frontier in gaining approval. Frontier and Spirit themselves have even acknowledged the significant antitrust risk inherent in their combination – both by adding a reverse break-up fee and walking back their optimistic timeline.

It is clear the market agrees – the JetBlue offer is good for Spirit shareholders. Since our initial proposal was made public on April 5, Spirit’s share price performance has reflected its shareholders’ overwhelmingly positive view of our offer, and their confidence in our ability to achieve regulatory clearance of the transaction.

The entrenched Spirit Board is now claiming they have served their shareholders by approving an amended Frontier transaction. Yet in fact, they have never negotiated with us and have now favored a transaction that better serves Frontier’s controlling shareholder than Spirit’s shareholders. In exchange for the minimal financial concessions the Spirit Board was able to get from Frontier – which, after even cursory examination, don’t add value or support their projected future value – they chose to weaken Spirit shareholders’ governance in the combined company through less board representation.

Spirit’s entrenched Board continues to stand in the way of the most value creating opportunity available to Spirit shareholders. Time is running out for Spirit shareholders to maximize their investment. The facts are clear. Our proposal is superior. Vote AGAINST the Frontier transaction at Spirit’s special meeting on June 30.

Sincerely,

Robin Hayes
Chief Executive Officer

The airline continued;

JetBlue today welcomed the recent public support in favor of its clearly superior offer to acquire Spirit).

• Institutional Shareholder Services (“ISS”), a leading independent proxy advisory firm, issued late yesterday an updated report now acknowledging that clients may find the modified JetBlue proposal “preferable” to the Frontier offer for Spirit and may therefore choose to vote AGAINST the inferior Frontier transaction at Spirit’s upcoming special meeting, despite ISS’s inability to change its official recommendation.
• Further, major Spirit shareholder TIG Advisors publicly declared that it will vote AGAINST the Frontier merger at the Spirit special meeting, and sent a letter to the Spirit Board in which it said, “We believe JetBlue’s acquisition proposal is the far superior outcome for Spirit and its shareholders, given its all-cash bid eliminates execution risk and maximizes certainty of value.”

In its new report, ISS, citing the recent changes to JetBlue’s offer, noted that “the enhancements by JetBlue may be enough to offset the potential upside of the proposed merger with Frontier (particularly when the market reaction to last week’s developments is considered – Spirit share price decreased 8.0 percent on June 27, 2022, the first trading day after announcement of the revised Frontier offer terms).”

ISS further noted that “the gap between the headline offers has not only widened since Spirit and Frontier modified the deal terms late last week, but the prepayment dividend and the reverse termination fee accompanying the JetBlue offer are now more favorable for Spirit shareholders than the corresponding provisions accompanying the Frontier offer. At the same time, the addition of the ticking fee in the JetBlue offer – a provision without a counterpart in the Frontier offer – provides a further level of regulatory risk mitigation.”

By entering into a revised merger agreement with Frontier less than a week before the special shareholder meeting, the Spirit Board has given ISS, and all shareholders, little time to weigh the improved proposals.

“Our decisively superior offer is being recognized by Spirit shareholders and proxy advisors as providing more for Spirit shareholders than the ill-fated Frontier merger, which the conflicted Spirit Board has entered into,” said Robin Hayes, chief executive officer, JetBlue. “While we understand and respect ISS’s reticence to change their official recommendation so close to the special shareholder meeting, we note that they have specifically instructed clients how to change their votes to vote AGAINST the inferior Spirit transaction. We intend to continue to actively solicit votes to defeat the Frontier proposal and to take every possible step available to us to assure that Spirit’s shareholders have the opportunity to choose the superior value we are offering. The negative market reaction to Spirit’s revised merger agreement is consistent with what we are hearing from shareholders in addition to TIG Advisors. Shareholders can send a clear message to the Spirit Board by voting ‘No’ at the upcoming Spirit special meeting.”

JetBlue aircraft photo gallery: