JetBlue bid for Spirit is driven by hunger for a ‘stealth’ asset: plane orders

Spirit Airlines has what one analyst calls a “stealth” asset, the opportunity for JetBlue Airways to grab scarce aircraft if its $3.6b offer goes through. A lack of future production slots for Airbus jets could limit growth at a stand-alone JetBlue, Chief Executive Officer Robin Hayes said Wednesday, a day after his carrier’s bid was announced. JetBlue’s offer is based on growing large enough to be an effective competitor to the four biggest U.S. carriers, which control about 80% of the domestic market. Combining existing JetBlue and Spirit orders is critical for that growth, Hayes said. “The supply of airplanes is very challenging for the next few years,” he said on a conference call with analysts. “This sets us up with a compelling order book.” Airbus already makes up most of both carriers’ fleets. Airbus customers face a wait of two to three years for A320 delivery slots. The backlog stood at 5,765 of the narrow-body jet at the end of December, including 3,323 for the popular A321neo. Spirit has orders for 120 of the A320 to be delivered through 2027, according to regulatory filings. That makes Spirit’s order book “a stealth undervalued asset,” JPMorgan Chase analyst Jamie Baker said in a note to clients. The shortage of Airbus and Boeing jets is a widespread problem, as Air Lease CEO John Plueger pointed out at an industry conference last month. “If carriers are looking for lift in ’23 and ’24, there’s not a lot left.” JetBlue has orders for 64 A321s, plus 62 of Airbus’s smaller A220 aircraft. A combined airline would have 455 planes and 312 Airbus jets to be delivered over the next six years, JetBlue said, “mitigating the persistent challenge” of limited production.<br/>