JetBlue plans to reduce fares after its acquisition of Spirit Airlines.
JetBlue announced Thursday that it will acquire Spirit Airlines for $3.8 billion, according to an email sent to customers.
The deal will “bring together two airlines with a shared goal of disrupting the industry,” according to an announcement on Spirit’s website. The merger will provide a “customer-centric, low-fare alternative” to other major airlines.
“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,” says JetBlue CEO Robin Hayes.
With more JetBlue flight options, airfares will go down across the board, the company says. Research shows that JetBlue’s presence on a route tends to lower ticket prices.
After converting Spirit’s planes to JetBlue blue, the new fleet of planes will be able to compete more effectively with the four major airlines—United, Delta, American, and Southwest.
Both Spirit and JetBlue’s shares rose after the announcement, with Spirit gaining 4% and JetBlue 1%. JetBlue will pay Spirit shareholders $33.50 per share.
This announcement follows Spirit’s decision to cancel a deal with Frontier Airlines this week after the deal did not receive sufficient shareholder support. Frontier’s offer was worth approximately $2.7 billion.
The merger could face opposition from the Biden administration and the antitrust division which have promised to crack down on mergers that stifle competition.
JetBlue is confident that it will receive approval in all regulatory measures and has hired antitrust expert Glenn Pomerantz to help navigate the process, according to an announcement.
