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JetBlue would pay shareholders $2.50 per share upfront upon deal approval 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 lengthy process. If the deal is not completed or terminated by 2024, the value could rise to $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 expects $600 to $700 million in annual savings from spreading fixed costs across a larger company once the two airlines are integrated. Based on 2019 revenues, the combined airline is expected to have annual revenues of approximately $11.9 billion.
After years of bankruptcies and consolidation, the industry had largely stabilized by early 2010 with four airlines, American, Delta, Southwest and United, holding most of the market. In 2016, JetBlue lost a bidding war to Virgin America, thwarting plans for rapid expansion. Alaska Airlines acquired Virgin in 2018.
JetBlue said the acquisition would help expand its presence in select 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 airlines, such as Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta and Miami — a strategy devised in part to try to convince antitrust regulators eager to get 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But even if the deal closes successfully, airline mergers are notoriously difficult, requiring unions, sometimes outdated and incompatible computer systems, mismatched aircraft fleets, and disparate corporate cultures.
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