Spirit shareholders approve JetBlue deal in latest step of merger saga
Spirit Airlines shareholders approved the proposed merger with JetBlue on Wednesday, marking the next major phase of the saga over Spirit's future.
The vote came three months after shareholders effectively rejected a proposed merger with fellow ultra-low-cost carrier Frontier Airlines.
JetBlue first made an unsolicited offer for Spirit in April, setting off a protracted battle with Frontier as both airlines sought to acquire Spirit.
Spirit's board and executives urged shareholders to approve the stock-and-cash offer from Frontier, which despite being valued lower than JetBlue's offer, the board said was more likely to be approved by regulators. Spirit eventually pulled the shareholder vote, which appeared to be headed toward a rejection, before it could be completed. The board has since voted in favor of the JetBlue offer.
A combined Spirit-JetBlue would create America's fifth-largest airline, behind American, Delta, United and Southwest. JetBlue and Spirit are currently the sixth and seventh-largest, respectively.
JetBlue's current $3.8 billion offer would see the New York-based carrier purchase Spirit outright with cash. The airline has said that it plans to refurbish and rebrand Spirit's aircraft as its own, essentially doubling its size and doing away with the other low-fare, bare-bones brand.
Why fight for the armrest when you can rest easy? The difference between cramped flying and classy flying is just a matter of points away with the free TPG App!
JetBlue has argued that its current growth opportunities are limited by new aircraft supply chains and the overall labor environment, which has seen high demand for pilots, flight attendants, aircraft maintenance technicians and others. By acquiring Spirit and absorbing it, JetBlue executives say, they can offer stronger competition against the so-called "big four" airlines.
The Biden Administration, however, has shown opposition to consolidation across various industries including airlines. JetBlue and the Department of Justice are currently litigating an antitrust case in U.S. District Court surrounding the airline's Northeast Alliance with American, which the DOJ has accused of being anti-competitive.
Nevertheless, JetBlue executives have remained confident in their ability to get regulatory approval, even if they eventually have to argue their case in court.
"We're in the world where, if the DOJ looks at the landscape, they have to ask themselves, 'How did we get into a position where four airlines dominate 80% of the domestic seats?'" JetBlue president Joanna Geraghty asked during a remote interview with TPG in late July.
"The fundamental issue here at the DOJ level is fairness," she added. "We want to be able to compete on the same playing field that the DOJ created."
Read more: The battle for Spirit Airlines:
- Spirit terminates Frontier merger deal, paving way for possible JetBlue acquisition
- JetBlue vs. Frontier: Who will win the battle over Spirit and why does it matter?
- 3 reasons JetBlue's bid for Spirit could raise red flags for regulators
- JetBlue makes yet another offer for Spirit — but this time is different
- JetBlue is confident in Spirit deal despite regulatory hurdles, president says
Frontier CEO Barry Biffle, meanwhile, said that eliminating Spirit's brand would mean increased fares — and create opportunity for his airline.
"Consumers are going to want us because they're going to be paying more, so we'll grow as fast as we can to save them money," Biffle told TPG earlier this month.
JetBlue also faces a challenge in funding the acquisition.
On top of the $3.8 billion acquisition costs, JetBlue will face steep costs to retrofit Spirit's 180 aircraft, likely in the ballpark range of $3-$4 million per aircraft, or a total of around $540 million to $720 million, according to one estimate from an independent industry expert who asked not to be named.
JetBlue ended the second quarter of this year with just shy of $2.6 billion in cash, equivalents and investment securities, and $3.8 billion in debt (the airline valued its total assets, including aircraft, at $13.5 billion). Even if it depleted its entire cash and securities holdings, it would still be nearly $1 billion short for the acquisition.
Under the terms of its offer, JetBlue would also have to pay shareholders a reverse breakup fee worth about $470 million if the deal was rejected by the Department of Justice or otherwise falls through.
If approved by regulators, the deal could close as soon as early 2024.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
- Delta SkyMiles® Reserve American Express Card Members receive 15 Visits per Medallion® Year to the Delta Sky Club® when flying Delta and can unlock an unlimited number of Visits after spending $75,000 in purchases on your Card in a calendar year. Plus, you’ll receive four One-Time Guest Passes each Medallion Year so you can share the experience with family and friends when traveling Delta together.
- Enjoy complimentary access to The Centurion® Lounge in the U.S. and select international locations (as set forth on the Centurion Lounge Website), Sidecar by The Centurion® Lounge in the U.S. (see the Centurion Lounge Website for more information on Sidecar by The Centurion® Lounge availability), and Escape Lounges when flying on a Delta flight booked with the Delta SkyMiles® Reserve American Express Card. § To access Sidecar by The Centurion® Lounge, Card Members must arrive within 90 minutes of their departing flight (including layovers). To access The Centurion® Lounge, Card Members must arrive within 3 hours of their departing flight. Effective July 8, 2026, during a layover, Card Members must arrive within 5 hours of the connecting flight.
- Receive $2,500 Medallion® Qualification Dollars with MQD Headstart each Medallion Qualification Year and earn $1 MQD for each $10 in purchases on your Delta SkyMiles® Reserve American Express Card with MQD Boost to get closer to Status next Medallion Year.
- Enjoy a Companion Certificate on a Delta First, Delta Comfort, or Delta Main round-trip flight to select destinations each year after renewal of your Card. The Companion Certificate requires payment of government-imposed taxes and fees of between $22 and $250 (for itineraries with up to four flight segments). Baggage charges and other restrictions apply. Delta Basic experiences are not eligible for this benefit.
- $240 Resy Credit: When you use your Delta SkyMiles® Reserve American Express Card for eligible purchases with U.S. Resy restaurants, you can earn up to $20 each month in statement credits. Enrollment required.
- $120 Rideshare Credit: Earn up to $10 back in statement credits each month after you use your Delta SkyMiles® Reserve American Express Card to pay for U.S. rideshare purchases with select providers. Enrollment required.
- Delta SkyMiles® Reserve American Express Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- With your Delta SkyMiles® Reserve American Express Card, receive upgrade priority over others with the same Medallion tier, product and fare experience purchased, and Million Miler milestone when you fly with Delta.
- Earn 3X Miles on Delta purchases and earn 1X Miles on all other eligible purchases.
- No Foreign Transaction Fees. Enjoy international travel without additional fees on purchases made abroad.
- $650 Annual Fee.
- Apply with confidence. Know if you're approved for a Card with no impact to your credit score. If you're approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees