JetBlue-Spirit Airlines Proposed Deal: A Skift Timeline

Skift Take

The proposed JetBlue-Spirit merger has many twists and turns in the last year, and here’s a look at the major developments of a deal that would shake up the airline industry.

The proposed merger of JetBlue Airways and Spirit Airlines has been one of the travel industry’s most watched developments over the past year and a half, with the two carriers aiming to create the U.S.’ fifth largest domestic airline.

Before JetBlue and Spirit proposed merger, Spirit was looking to join forces with Frontier Airlines. So how has the entire scenario played out? Here’s a timeline of the massive planned merger, including its major developments.

February 2022: Frontier and Spirit Agree to Merge in $6.6 Billion Stock and Debt Deal

Frontier and Spirit unveiled plans in February 2022 to merge in a deal that would create the U.S.’ fifth-largest carrier and one serving more than 145 destinations in 19 countries.

The transaction is valued at $6.6 billion, including the $2.9 billion equity value of Spirit as well as net debt and operating lease liabilities. 

They aimed to close the transaction in the second half of 2022.

Several public advocacy groups the following month called on U.S. regulators to block Frontier and Spirit’s proposed merger. Public Citizen, Fight for the Future and seven other groups wrote in a letter to the Transportation and Justice Departments that the deal “would destroy competition in the only competitive market segment of the highly consolidated airline industry.”

Eight lawmakers — including Senators Elizabeth Warren (D-Massachusetts) and Bernie Sanders (I-Vermont) and Representative Alexandria Ocasio-Cortez (D-New York) — wrote a separate letter expressing their concerns about the merger, saying the “resulting Spirit-Frontier carrier could hurt consumers in numerous ways, consolidating market power for the airlines and reducing choices for travelers.”

April 2022: JetBlue Submits $3.6 Billion Bid For Spirit

Spirit confirmed in April 2022 that it received an unsolicited offer from JetBlue, which Spirit said proposed to acquire “all of the outstanding shares of Spirit’s common stock in an all-cash transaction for $33.00 per share.” JetBlue’s $3.6 billion bid offers investors a $700 million premium over the $2.9 billion Frontier-Spirit merger.

Skift reported it’s uncertain if a JetBlue-Spirit deal would receive approval as JetBlue is under regulatory scrutiny for its partnership with American Airlines, known as the “Northeast Alliance.”

Spirit said in April 2022 that it started talks with JetBlue regarding its $3.6 billion offer. Reuters reported that either possible outcome — merging with JetBlue or Frontier — would surely invite close scrutiny from U.S. antitrust authorities, who have taken an aggressive stance toward deals they believe would reduce competition and raise prices.

May 2022: Spirit Turns Down JetBlue Bid For Frontier Merger

Spirit said in May 2022 that it would continue to a seek a $2.9 billion merger with Frontier Airlines instead of accepting JetBlue’s offer. Edward Russell, editor of Skift publication Airline Weekly, reported Spirit rejected JetBlue’s bid because it believe that deal wouldn’t receive approval in addition to it being it too risky for its stakeholders.

“We do not believe the (Department of Justice) will be persuaded that JetBlue should be allowed to acquire Spirit in an anticompetitive move that would eliminate the largest (discount) carrier,” Spirit CEO Ted Christie said in a letter to the company’s management team.

June 2022: JetBlue Continues to Pursue Deal With Spirit

Frontier’s parent company said it would pay Spirit a $250 million break-up fee if regulators didn’t approve the planned Spirit-Frontier union for antitrust reasons, an attempt to win over Spirit shareholders.

In response to Frontier’s offer, JetBlue increased its reverse break-up fee to $350 million and said it would pre-pay $164 million of that amount in its latest offer to Spirit shareholders. JetBlue also submitted a $3.4 billion hostile offer for Spirit, with JetBlue CEO Robin Hayes arguing that a JetBlue-Spirit merger was necessary to create a competitor at scale to the four largest U.S. airlines: American, Delta, Southwest, and United.

After a report from J.P. Morgan analyst Jamie Baker said the likelihood of a JetBlue-Sprit merger was improving, Spirit said its board of directions was actively engaged in discussions with JetBlue. Frontier CEO Barry Biffle sent a letter to Christie expressing his concern about a lack of support from both Spirit executives and its shareholders.

July 2022: Spirit Repeatedly Delays Shareholder Votes; Rejects Frontier

In July 2022, Spirit pushed back critical shareholder votes on the proposed merger with Frontier — as well as JetBlue’s hostile offer — for the fourth time. Biffle asked Spirit to delay a vote, arguing that Spirit was still very far from receiving approval from its shareholders. Shareholder group Institutional Shareholder Services advised Spirit investors to vote against a proposed merger with Frontier.

Spirit announced during its second quarter earnings call that the company’s planner merger with Frontier was off, enabling Spirit to accept JetBlue’s offer.

“JetBlue now appears victorious in its pursuit of Spirit. All that’s left is negotiating details with Spirit’s management,” said Jay Shabat, senior analyst at Skift publication Airline Weekly. “Spirit’s shareholders have spoken.”

October 2022: Spirit Shareholders Approve JetBlue Merger

More than half of Spirit investors voted in favor of its merger with JetBlue in October 2022, which Russell noted was a key — but not final — step in the transaction.

He added that JetBlue and Spirit still had to secure regulatory approval from the U.S. Justice Department before the merger could close. That was a far from a certainly with the Biden administration increasingly taking a hard line against consolidation in major industries.

March 2023: U.S. Sues to Block Merger

The U.S. Department of Justice filed a lawsuit to block the JetBlue-Spirit merger, citing concerns about competition. The department said the merger would hurt consumers by raising airfares on average 30%, especially in markets where both carriers are large.

But Russell reported that JetBlue had an enormous bargaining chip it could offer the Justice Department in exchange for approval of its merger with Spirit — its so-called Northeast Alliance with American Airlines.

The department had contended that partnership, which enables JetBlue and American to sell tickets on each other’s flights, would reduce competition on the East Coast. Russell wrote that JetBlue CEO Hayes and other company executives had repeatedly said the alliance is not on the table for its proposed merger with Spirit.

JetBlue and Spirit’s efforts to merge suffered a major blow that month when the U.S. Transportation Department denied an exemption request by the two carriers to operate under common ownership, citing the antitrust lawsuit.

The Justice Department’s push to thwart the merger got a boost that month when the attorney generals of California, Maryland, New Jersey, and North Carolina signed on to the lawsuit.

May 2023: Federal Court Rules Against JetBlue-American Northeast Alliance

A federal judge ruled in May that American and JetBlue had to end their alliance within 30 days, agreeing with the Justice Department that their partnership resulted in higher prices for consumers. U.S. District Judge Leo Sorokin said the partnership “substantially diminishes competition in the domestic market for air travel.”

July 2023: JetBlue Drops Fight For American Alliance to Focus on Spirit

Russell reported in July that JetBlue would not fight to preserve its alliance with American, focusing instead on securing approval for the merger with Spirit. However, he wrote that ending that partnership wouldn’t guarantee that the Justice Department would approve it.

Next Steps

The Department of Justice lawsuit to block the proposed JetBlue-Spirit merger will go to trial on October 16. U.S. District Judge William Young has said he aims to issue a ruling by the end of the year.

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