JetBlue is one step closer to acquiring Spirit Airlines for $3.8 billion. On Wednesday, Spirit Airlines shareholders voted to accept the offer from JetBlue after the airline won a bidding war against Frontier.
The details:
Wall Street was already optimistic about the offer as they forced Spirit to drop the merger with Frontier and accept the cash offer from JetBlue.
“This is an important step forward on our path to closing a combination that will create the most compelling national low-fare challenger to the dominant U.S. carriers,” Spirit CEO Ted Christie said after the vote.
A new look:
JetBlue has plans to paint all Spirit planes and combine all the pilots into the JetBlue workforce. Once the deal is complete, it will make JetBlue the fifth largest airline in the nation.
However, federal regulators could be against the deal since it would eliminate Spirit Airlines. Therefore, potentially leaving customers open to higher rates. The airline industry has currently had issues with the federal government which have been opposed to mergers since 2016.
Protest:
There’s a case right now where the Justice Department wants to kill the partnership between JetBlue and American Airlines called the Northeast Alliance or NEA. Lawyers within the Justice Department are committed to keeping the airline industry competitive. Mergers and alliances could drive up prices for consumers. If the NEA trial rules in favor of the Justice Department, it could cause a major issue in JetBlue trying to acquire Spirit Airlines.
“If (JetBlue and American) win the case, and the judge thinks the NEA does not harm consumers enough, it’s almost guaranteed that there will be an antitrust challenge to the Spirit acquisition,” according to Florian Ederer, antitrust expert and economics professor at Yale University.
The airline argues the alliance with American should be allowed because it’s not a merger. The acquisition of Spirit, however, would merge two airlines.
JetBlue stands by their alliance with American Airlines, stating that it should be allowed because it’s not a merger. However, JetBlue acquiring Spirit Airlines clearly is.
Robin Hayes, JetBlue CEO, says he’s confident he’ll get the approval to buy Spirit. They hope to close the deal in the beginning of 2024.
