Spirit Airlines' uncertain future has taken another turn as Boeing announced its plans to acquire Spirit Aerosystems, the parent company of Spirit Airlines' subcontractor, in an all-stock transaction valued at approximately $4.7 billion. The deal aims to align their commercial production systems, safety and quality management systems, and workforce. Spirit Aerosystems builds fuselages and other parts for both Airbus and Boeing, with Boeing being its biggest customer. The acquisition is seen as being in the best interest of the flying public, airline customers, employees, shareholders, and the country [cb060012].
This news comes amidst the ongoing bidding war between Frontier and JetBlue to acquire Spirit Airlines. JetBlue had previously made a $3.8 billion buyout offer for Spirit Airlines, but the deal is now in jeopardy after a federal judge blocked the proposed merger, citing concerns over competition. JetBlue has warned that it may terminate the buyout offer as early as this weekend, stating that certain conditions of the deal might not be met by the deadline set in the agreement between the two airlines. Spirit Airlines has disputed JetBlue's position and both airlines have filed their intention to appeal the federal judge's decision [d0dd5b54], [a08d151e].
The news of JetBlue's warning and the uncertainty surrounding the buyout offer has had a significant impact on Spirit Airlines' stock. Shares of the airline fell 11% in midday trading, reflecting investor concerns about the future of the company. In contrast, JetBlue Airways' stock gained 3% following the announcement [d0dd5b54].
In addition to the bidding war, there are reports that Spirit Aerosystems, the parent company of Spirit Airlines, could be bought by Boeing. Shares of Spirit Aerosystems surged following the report, with the company hiring bankers and having preliminary discussions with Boeing. However, it is unclear whether the talks will result in a transaction. If a deal is reached, it would mark a return for Spirit Aerosystems to Boeing, as the larger company spun it off in 2005. The news of a possible Boeing buyout has further added to the uncertainty surrounding Spirit Airlines' future. Shares of Spirit rose about 13%, while Boeing's stock fell 1.3% [0c390ace].
Meanwhile, JetBlue and Spirit Airlines have called off their $3.8 billion merger plans after a federal judge blocked the deal. As a result, JetBlue owes Spirit a breakup fee of $69 million and $400 million to Spirit's shareholders. The cancellation of the merger comes at a challenging time for Spirit Airlines, which is facing a difficult financial situation with a massive debt load and projected losses for this year and next year. The uncertainty surrounding Spirit Airlines' future and the failed merger with JetBlue have further contributed to the company's stock decline [e81cc825].
JetBlue Airways' stock predictions for 2025 are mixed, with some analysts expecting a slight decline from the current price of $6.80 as of April 15, 2024. The average analyst target suggests a potential decrease of roughly 12.65% to $5.94. The consensus rating for JetBlue is 'hold,' indicating limited potential for significant growth. Factors that could impact JetBlue's trajectory in 2025 include fuel costs, economic conditions, competition, financial health, operational efficiency, and growth strategies. Investors should consider their investment goals, risk tolerance, and portfolio diversification when deciding whether to invest in airline stocks like JetBlue [7aeb5adc].
Target has announced the launch of its paid membership program called Target Circle 360. The program offers perks such as unlimited free same-day delivery and free two-day shipping for a yearly fee of $49. However, the fee will increase to $99 after the initial promotion ends on May 18. This move by Target aims to compete with other retailers, such as Amazon, that offer similar membership programs. The launch of Target Circle 360 is expected to boost the company's revenue and customer loyalty [e81cc825].
Boeing has agreed to buy back Spirit AeroSystems for $4.7 billion in stock, while Airbus will take on the supplier's loss-making Europe-focused activities in return for compensation. The move comes after the Boeing 737 MAX crisis and doubts over the resilience of fuselage manufacturing. Spirit AeroSystems, which was spun off from Boeing in 2005, will be bought back by Boeing for about $37.25 per share, giving it an enterprise value of $8.3 billion including debt. Airbus will take over core activities at four of Spirit AeroSystems' plants and pay the supplier $1 for the assets. The deals are subject to due diligence and are expected to close in mid-2025 [29090d5a].