Spirit Airlines’ current stock forecast is set to rise significantly following the company’s announcement of a $3.8 billion takeover by JetBlue (Nasdaq: JBLU). In fact, it comes after a potential merger with a budget airline Border (Nasdaq: ULCC) was terminated by shareholders in a vote on July 27, 2022.
Now, Spirit Airlines companies (NYSE: SAVE) and JetBlue will seek to compete at a higher level with the “Big Four”. This includes Delta Airlines (NYSE: DAL), American airlines (Nasdaq: AAL), United Airlines (Nasdaq: UAL) and South West Airlines (NYSE:LUV).
Is this takeover a harbinger for the airline industry? Or will the Big Four continue to dominate the market? Let’s take a look at Spirit Airlines’ stock forecast after the takeover.
Spirit Airlines stock forecast history
Spirit Airlines is “committed to providing the best value in the sky”. And for the most part, it does so via cheap alternatives to more expensive airlines serving the same destinations.
However, there is always a caveat. Spirit doesn’t necessarily have the best reputation for amenities. For example, the flights are cheap, but his baggage fees are not. And its in-flight services can also be expensive. Finally, space, comfort and cleanliness are other issues that Spirit flights are often criticized for.
But if you’re traveling with light luggage for a short distance, such as carry-on only, you can’t beat the value provided by Spirit. And each airline has its pros and cons to consider. Even the big four are struggling with staff shortages, longer delays, cancellations and in-flight problems.
That’s why Spirit Airlines’ stock forecasts have always been competitive. It’s clear that Spirit is doing a great job of attracting customers with its low-cost flight options. And that will only grow as the Big Four continue to raise prices. As a result, most forecast models have Spirit shares in the $20-$40 range over the next 12 months. And it would be much higher if it weren’t for the current market downturn.
Traveling can be a stressful experience no matter which airline you choose. But this takeover by JetBlue will only help Spirit improve its services and expand its reach in the process.
Breakdown of the JetBlue takeover
Specifically, JetBlue is expected to pay $33.50 per share in its $3.8 billion takeover of Spirit Airlines. That’s significantly more than Frontier’s $19.99 per share merger offer.
Still, Spirit will pay nearly $100 million in merger-related termination fees to Frontier once the JetBlue deal is approved by regulators. And JetBlue will pay $2.50 per share of the tender offer in cash to Spirit shareholders. There is also a listing fee of $0.10 payable to shareholders per month from January 2023 until closing. This will cover compensation for the extra time needed to overcome regulatory hurdles.
Since the news broke, Spirit and JetBlue shares have risen. Spirit is trading around $25 while JetBlue is pushing $9 per share.
“We are thrilled to deliver this compelling combination that fuels our strategic growth, enabling JetBlue to deliver our unique blend of low fares and exceptional service to more customers, on more routes,” said JetBlue CEO Robin Hayes, in the press release. “We look forward to welcoming Spirit’s exceptional team members to JetBlue and together creating a fifth customer-centric carrier in the United States. Spirit and JetBlue will continue to drive forward our shared goal of disrupting the industry to bring down fares on all four major airlines. This combination is an exciting opportunity to diversify and expand our network, add jobs and new opportunities for crew members, and expand our platform for growth. profitable.
JetBlue also plans to refurbish Spirit’s striking yellow planes. For example, this includes more sparse interiors in a JetBlue style and more legroom for customers.
Invest in airline stocks
Airline stocks become a popular choice for investors during the summer months. Indeed, travel demands increase when the weather warms up. However, 2022 has been a disaster for much of the stock market. The US economy is grappling with fears of recession, shortages and high inflation. As a result, stocks are down in almost every sector as uncertainty continues to mount.
Nonetheless, this JetBlue takeover is a power move that will have a huge impact on Spirit Airlines’ stock forecast. And you might want to consider this stock for your portfolio.
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Corey Mann is Investment U’s content manager. He has over 10 years of experience as a journalist and content creator. Since 2012, Corey’s work has been featured in major publications such as The Virginia Pilot, The Washington Post, CNN, MSNBC and more. When Corey isn’t focusing on Investment U, he enjoys traveling with his wife, attending Yankees games and spending time with his family.