JetBlue would pay shareholders $2.50 per share upfront on approval of the deal and the equivalent of ten cents per share per month starting next year — an incentive to keep them on board during what could be a protracted process. If the deal is not completed or terminated by 2024, its value could rise to as much as $34.15 per share.
The combined airline will be based in New York and led by JetBlue’s chief executive, Robin Hayes. It will have a fleet of 458 aircraft, employ 34,000 employees and serve an estimated 77 million customers, the airlines said.
JetBlue said it expected $600 to $700 million in annual savings from spreading fixed costs over a larger business once the two airlines are integrated. Based on 2019 revenues, the combined airline is projected to have annual revenues of about $11.9 billion.
After years of bankruptcies and consolidation, the industry had mostly stabilized by the early 2010s with four airlines, American, Delta, Southwest and United, controlling most of the market. In 2016, JetBlue lost a bidding war for Virgin America, thwarting its plans for rapid expansion. Alaska Airlines acquired Virgin in 2018.
JetBlue said the acquisition would help it to expand its presence in certain cities such as Fort Lauderdale, Orlando, San Juan, and Los Angeles. The airline said it expected to grow at the hub airports of the four largest carriers, such as Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta, and Miami — a strategy devised in part to try and win over antitrust regulators who are eager to see more competition at airports where one or two airlines control a large majority of gates and flights.
But even if the deal closes successfully, airline mergers are notoriously difficult, requiring the melding of unions, sometimes antiquated and incompatible computer systems, mismatched fleets of aircraft and disparate company cultures.
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