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Spirit Airlines (SAVE) to Begin Talks on JetBlue's $3.6B Offer
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Spirit Airlines (SAVE - Free Report) announced that it expects to begin discussions with JetBlue Airways (JBLU - Free Report) regarding the latter’s $3.6-billion proposal to acquire the company. SAVE said that it could lead to a "superior proposal" from its previously inked merger agreement with Frontier Airlines, the subsidiary of Frontier Group Holdings (ULCC - Free Report) .
The merger proposals between the low-cost carriers come at a time when the airline industry is steadily rebounding from the pandemic-led slump. The low-cost carriers that depend primarily on leisure travel demand and domestic markets are aiming to capitalize on the domestic travel recovery, which is fast approaching pre-pandemic levels. A consolidation, either between Spirit Airlines and JetBlue or between Spirit Airlines and Frontier Airlines, could give tough competition to the big four U.S. carriers, which have significant international operations and are lagging their low-cost counterparts on the recovery front.
JetBlue’s $3.6-billion deal, equivalent to $33 per share in cash, represents a premium of 52% to Spirit Airlines’ undisturbed share price on Feb 4, 2022, and a premium of 50% to its closing share price on Apr 4, 2022. JBLU feels the proposal is “superior” to the Spirit Airlines-Frontier Airlines deal as it provides an attractive opportunity to SAVE’s shareholders.
Per JetBlue, combining the two airlines would create the fifth-largest domestic airline, giving tough competition to the big four U.S. carriers. The Spirit Airlines deal is expected to help JetBlue expand its footprint in New York and Florida. The potential merger will help JBLU expand across the United States, the Caribbean and Latin America.
Back in February, Spirit Airlines had entered into a $2.9-billion ($6.6 billion when the assumption of net debt and operating lease liabilities are considered) merger agreement with Frontier Airlines, which would create the fifth-largest U.S. airline, offering ultra-low fares for travel.
A combination of Spirit Airlines and Frontier is expected to generate annual revenues of approximately $5.3 billion (based on 2021 results). Once fully integrated, the combined entity is expected to deliver annual run-rate operating synergies of $500 million.
While Spirit Airlines and JetBlue carry a Zacks Rank #3 (Hold), Frontier carries a Zacks Rank #4 (Sell).
Image: Shutterstock
Spirit Airlines (SAVE) to Begin Talks on JetBlue's $3.6B Offer
Spirit Airlines (SAVE - Free Report) announced that it expects to begin discussions with JetBlue Airways (JBLU - Free Report) regarding the latter’s $3.6-billion proposal to acquire the company. SAVE said that it could lead to a "superior proposal" from its previously inked merger agreement with Frontier Airlines, the subsidiary of Frontier Group Holdings (ULCC - Free Report) .
The merger proposals between the low-cost carriers come at a time when the airline industry is steadily rebounding from the pandemic-led slump. The low-cost carriers that depend primarily on leisure travel demand and domestic markets are aiming to capitalize on the domestic travel recovery, which is fast approaching pre-pandemic levels. A consolidation, either between Spirit Airlines and JetBlue or between Spirit Airlines and Frontier Airlines, could give tough competition to the big four U.S. carriers, which have significant international operations and are lagging their low-cost counterparts on the recovery front.
JetBlue’s $3.6-billion deal, equivalent to $33 per share in cash, represents a premium of 52% to Spirit Airlines’ undisturbed share price on Feb 4, 2022, and a premium of 50% to its closing share price on Apr 4, 2022. JBLU feels the proposal is “superior” to the Spirit Airlines-Frontier Airlines deal as it provides an attractive opportunity to SAVE’s shareholders.
Spirit Airlines, Inc. Price
Spirit Airlines, Inc. price | Spirit Airlines, Inc. Quote
Per JetBlue, combining the two airlines would create the fifth-largest domestic airline, giving tough competition to the big four U.S. carriers. The Spirit Airlines deal is expected to help JetBlue expand its footprint in New York and Florida. The potential merger will help JBLU expand across the United States, the Caribbean and Latin America.
Back in February, Spirit Airlines had entered into a $2.9-billion ($6.6 billion when the assumption of net debt and operating lease liabilities are considered) merger agreement with Frontier Airlines, which would create the fifth-largest U.S. airline, offering ultra-low fares for travel.
A combination of Spirit Airlines and Frontier is expected to generate annual revenues of approximately $5.3 billion (based on 2021 results). Once fully integrated, the combined entity is expected to deliver annual run-rate operating synergies of $500 million.
While Spirit Airlines and JetBlue carry a Zacks Rank #3 (Hold), Frontier carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.