JetBlue agrees to buy Spirit in $3.8 billion deal to create fifth-largest U.S. airline

LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.

Leslie Josephs | CNBC

JetBlue Airways reached a deal to buy Spirit Airlines, hours after the discount carrier scrapped plans to merge with Frontier Airlines.

The New York-based carrier said it will pay $33.50 a share in cash for Spirit in a $3.8 billion deal.

A JetBlue acquisition of Spirit would create the country’s fifth-largest carrier and, if approved by regulators, would leave Frontier as the largest discount carrier in the U.S.

JetBlue’s previous surprise, all-cash bid for Spirit in April had thrown Spirit’s plan to combine with fellow discounter Frontier into question. For months, Frontier and JetBlue competed for Spirit, each sweetening their offers, until the original merger plan fell apart Wednesday, clearing the way for JetBlue.

Spirit had said it planned to continue talks to sell itself to JetBlue after ending the Frontier agreement.

JetBlue executives have argued for months that buying Miramar, Florida-based Spirit would help it compete with large carriers like American, Delta, United and Southwest, which control most of the U.S. market, and fast-track its growth by giving it access to more Airbus jetliners and pilots, both of which are in short supply.

JetBlue wants to refurbish Spirit’s planes in JetBlue style, featuring seatback screens and more legroom.

Spirit previously rebuffed JetBlue’s bids and said such a deal wasn’t likely to be approved by regulators, in part because JetBlue’s alliance with American, which the Justice Department sued to block last year. The deal faces a high hurdle for regulatory approval.

The Justice Department didn’t immediately comment on the deal on Thursday.

Spirit shares were up more than 4% in premarket trading after the deal was announced, while JetBlue was up 0.5%.

(With Inputs from cnbc)

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