Analyst 'Struggles to Find The Benefits' From JetBlue's Takeover Bid For Spirit

JetBlue Airways Corporation (NASDAQ: JBLU) has made a $33 per share offer for Spirit Airlines Incorporated (NYSE: SAVE), which equates to $3.7 billion in market capitalization, $7.4 billion in enterprise value and “a 7.3x EV/EBITDAR multiple on our 2023 estimates,” according to BofA Securities.

The JetBlue Airways Analyst: Andrew Didora maintained a Buy rating on JetBlue Airways, with an unchanged price target of $17.

The JetBlue Airways Thesis: The deal came as a surprise and the biggest rationale seems to be scale, given the “nearly all Airbus fleet for both airlines plus the ability for JBLU to plug into SAVE’s orderbook,” Didora said in the note.

Also Read: Why JetBlue Airways Stock Is Falling Today

“We struggle to find additional benefits for JBLU,” the analyst wrote. He added that the deal would “eliminate one of the lowest fare and fastest growing airlines in the US,” which may increase regulatory scrutiny.

“In 2019, SAVE’s all in passenger revenue per flight segment was $111 compared to JBLU’s average fare of $182…these fare differentials could make it more difficult for JBLU to capture the SAVE customer,” Didora further mentioned.

JBLU Price Action: Shares of JetBlue Airways had tanked 8.36% to $12.50 on Wednesday morning, according to Benzinga Pro.