SAVE Stock Up 22% after JetBlue Offers to Buy Spirit Airlines for $3.6B

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Should the acquisition materialize, JetBlue and Spirit Airlines will have 32,000 employees combined and will be headquartered in New York.

Spirit Airlines Inc (NASDAQ: SAVE) stock closed Tuesday trading at $26.92 having gained 22.42 percent during the day. However, approximately 1.23 percent of the gains had been liquidated as of April 5, 2022, at 7.59 pm. The spike has directly been attributed to news that JetBlue Airways Corporation (NASDAQ: JBLU) offered to purchase budget carrier Spirit Airlines for $3.6 billion.

Consequently, JBLU shares declined 7.08 percent on Tuesday to close the day trading at $13.64.

This is not the first bid for Spirit Airlines. A few months ago, Frontier Group Holdings Inc (NASDAQ: ULCC) agreed to merge with Spirit to form a larger airline company. Notably, ULCC stock closed Tuesday trading at $11.92, up 3.92 percent from the day’s opening price.

The mergers and acquisitions in the airline industry are a means to survive during the Covid crisis.

Moreover, the Covid pandemic has crippled most airline businesses following low customer turnout.

Spirit Airlines has indicated that it is evaluating the best deal to go forward with.

“The board will pursue the course of action it determines to be in the best interests of Spirit and its stockholders,” the company said in a statement.

Should the acquisition materialize, JetBlue and Spirit Airlines will have 32,000 employees combined and will be headquartered in New York.

Otherwise, the new airline company will be much prepared to take head on the rising competition. Furthermore, leading airlines in the United States have over 1000 aircraft. Reportedly, the top four airlines control approximately 70 percent of the United States market.

Spirit Airlines (SAVE) Stock and the Market Outlook

According to market data provided by MarketWatch, Spirit Airlines stock market has had mixed results in the past two years. Whereby, in the past year, SAVE stock has dropped 29.69 percent. However, the company’s stock market has gained approximately 23 percent and 39 percent YTD and the past one month respectively through Tuesday.

The acquisition would reduce competition and limit options for consumers, according to market pundits.

“We can all agree that Spirit has a very different brand and product than JetBlue, and so at first glance, you may not think we’d make a great pair,” JetBlue CEO Robin Hayes and COO Joanna Geraghty wrote to employees after announcing the bid for Spirit. “However, when you dig deeper, you’ll realize we could be a perfect match. After all, our strong belief has always been that Customers shouldn’t have to choose between a low fare and a great experience, and JetBlue is the only airline that offers both.”

Spirit Airlines has a market valuation of approximately $2.39 billion with 1086 million shares outstanding. Otherwise, a survey conducted by MarketWatch indicates SAVE shares received an average rating of over from 10 ratings.

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Steve Muchoki

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