Good morning. My name is Myra, and I would like to welcome everyone to the JetBlue Airways conference call. As a reminder, today's call is being recorded. At this time, all participants are in listen only mode. I would now like to turn the call over to JetBlue's Director of Investor Relations, Joe Caiado. Please go ahead.
Good morning. Thank you for joining our call to discuss JetBlue's superior proposal to acquire Spirit, positioning America's much loved airline as the most compelling national low-fare challenger to the dominant big four carriers in a transaction that creates long-term sustainable value for all stakeholders. On today's call, you'll hear from JetBlue CEO, Robin Hayes, and CFO, Ursula Hurley, who will provide an overview of the proposal, the strategic rationale, and the financial impact. We also have our general counsel and other members of JetBlue Senior Leadership team present for today's call. Following the prepared remarks portion of the call, the team will be available to answer questions from the Analysts in the media. In addition to the press release on this proposed transaction, we will also be referencing an investor presentation which is available on our website at investor.jetblue.com, and has been filed with the SEC.
Before we begin, I'd also like to remind everyone that today's call includes forward-looking statements about future events. All such forward-looking statements are subject to certain risks and uncertainties, and actual results may differ materially. The statements made during this call are made only as of the date of the call, and we undertake no obligation to update the information. Please refer to our most recent Form 10-K for a more detailed discussion of the risk factors that could cause the actual results to differ materially from those contained in our forward-looking statements. These and other important legal disclaimers are included in slide two of the investor presentation. In addition, this call and investor presentation does not constitute an offer to sell or the solicitation of any offer to buy any securities or solicitation of any vote or approval.
In furtherance of this proposal and subject to future developments, JetBlue, and if a negotiated transaction is agreed to, Spirit may file one or more proxy statements or other documents with the SEC. Investors should read the proxy statements and other documents filed with the SEC if and when they become available, as they will contain important information about the possible transaction. With that, I'll turn the call over to JetBlue CEO, Robin Hayes. Robin.
Thanks, Joe. Welcome, everyone. Thanks for joining us, today. I hear some of you on the road, which is a great sign for business travel as well. Let's start on slide three of the deck. We are extremely excited to share with you our bold vision to create the most compelling national fare challenger to the dominant big four airlines through our clearly superior proposal to acquire Spirit. Our $33 per share all-cash offer values Spirit equity at $3.6 billion on a fully diluted basis. Together, JetBlue and Spirit will be better positioned to challenge the Big Four, creating value for both companies, shareholders, customers, crew members and team members and other stakeholders.
The proposed combination accelerates JetBlue's strategic plan, turbocharging our Focus City strategy, securing valuable access to aircraft and airport infrastructure for future growth, and further diversifying our network. The transaction will also drive sustained long-term value for JetBlue shareholders by significantly enhancing our financial profile, approximately doubling our annual revenue growth through the middle of the decade, and taking a significant step forward on our path to superior margins. We expect the transaction to be accretive to EPS in year one and deliver net run rate synergies of $600 million-$700 million within three years. For customers, we have always believed that you shouldn't have to choose between a low fare and a great experience. The combined airline would fly under the JetBlue brand, increase competition in the market with a sustainable customer-centric challenger, and bring the JetBlue Effect to more people and more places.
This JetBlue Effect, resulting from our unique combination of low fares and award-winning service, has proven to be more effective in lowering fares on legacy routes compared to ultra low cost carriers. I will now hand over to Ursula to provide you with an overview of the proposal before we discuss in greater depth the strategic rationale and of course, the financial impact.
Thank you, Robin, and good morning, everyone. Thank you for joining us. Turning to slide five, we're proposing to acquire 100% of Spirit for $33 per share in cash in a superior offer that represents a significant premium and provides full and certain value to Spirit shareholders. This all-cash proposal represents a 50% premium to Spirit's closing price as of April 4, and a 37% premium to the implied value of the Frontier transaction as of April 4. A JetBlue shareholder vote is not required to complete the proposed transaction, nor is there a financing contingency. We intend to fund the transaction with cash on hand and debt financing led by Goldman Sachs. Given our conviction in securing the necessary antitrust approval, we are highly confident the proposed transaction can be completed on a timeframe generally consistent with the pending transaction.
Turning to slide six, you can see the superior value of JetBlue's proposal relative to the Frontier transaction, including the significant premium that provides immediate liquidity and certain value for Spirit shareholders. The transaction implies highly attractive transaction multiples for Spirit at 7.9x 2019 EBITDAR or 14.4x estimated 2022 EBITDAR. In contrast, the Frontier transaction value is uncertain and depends on realized synergy and market risk in addition to the retention of key talent. Turning to slide seven. We are able and committed to moving quickly to execute the transaction, which has been unanimously approved by JetBlue's Board of directors. Our team has conducted a thorough review of publicly available information, and we have a dedicated team with the necessary expertise ready to complete final due diligence in a timely manner.
As Robin stated, the pro-competitive features of this proposed combination support our high conviction in our ability to close, further reinforced by an economic and regulatory assessment that we have undertaken with outside experts. Data shows the JetBlue Effect is more effective than the ultra-low-cost model in lowering legacy fares and bringing heightened competition to underserved legacy markets. Therefore, more consumers will benefit from the expanded service offerings provided by the combined airline. We strongly believe we can secure antitrust approval and close the transaction, and a definitive agreement would include contractual commitments designed to address regulatory concerns, including a reverse breakup fee payable to Spirit in the event that we are unable to complete the transaction for antitrust reasons. With that, I will hand it back to Robin to overview the strategic rationale of the proposed transaction for JetBlue.
Thank you, Ursula. Let's turn to slide nine. We will create a significant national low-fare challenger of scale to the dominant big four airlines and accelerate our strategic plan, driving sustainable long-term value for all of our stakeholders. Let's turn to slide ten. We are proud that JetBlue is an airline customers love to fly, and we are excited that this transaction will enable us to deliver the excellent JetBlue experience to even more travelers across the country. Our expanded network would offer more than 1,700 daily flights and serve over 130 destinations, creating a significantly more competitive network and increasing connectivity to JetBlue's focus cities. Let's turn to slide eleven.
As you know, in the 22 years since JetBlue first brought low fares to New York City, airline mergers have created a landscape where the large four U.S. carriers control more than 80% of the domestic market, to the detriment of consumers. The combination of JetBlue and Spirit would increase competition by creating the fifth-largest domestic airline, better positioned on a national level as a customer-centric low-fare alternative to the big four airlines. While both JetBlue and Spirit share a key focus on keeping costs low, only our unique business model does so while offering network breadth and depth in our focus cities, a best-in-class product offering and service, including a true award-winning premium cabin experience and a robust loyalty program. The current merger proposal assumes the rebranding and retrofitting of Spirit's fleet as JetBlue, including a superior onboard experience for Spirit customers.
Spirit has deployed some innovative airport technology for crew members and customers that would benefit our airport operations, and we look forward to conducting a comprehensive review of Spirit's product offering, operational and customer technology, and talent pool to make sure we optimize the combined airline. Turning to slide 12. This illustrates how the proposed combination will complement our existing NEA strategy and further diversify our network footprint. It significantly increases our relevance by accelerating our strategic growth plan in our focus cities of Fort Lauderdale, Orlando, Los Angeles, and San Juan. It unlocks growth opportunities by securing airport access in legacy hubs where the dominant carriers control with high fares, including Las Vegas, Dallas, Houston, Chicago, Detroit, Atlanta, and Miami. As New York's hometown airline, the combined company would maintain the JetBlue brand and of course, continue to be based in New York City.
Through our new Northeast Alliance with American Airlines, we have already shown larger scale benefits to customers and communities with more choice, lower fares, a better experience, and significant job growth. The combination with Spirit will perfectly complement the NEA's positive impact in the Northeast by similarly expanding the JetBlue brand in Florida, as well as many other cities across the country. With Spirit's headquarters in the greater Fort Lauderdale area and presence at Fort Lauderdale Hollywood International Airport, JetBlue would be positioned to deepen its commitment to Florida. Both Fort Lauderdale and Orlando are JetBlue-focused cities, and our fast-growing JetBlue Travel Products subsidiary is based in the Fort Lauderdale area. Meanwhile, Orlando is home to our state-of-the-art training campus, where we will plan for significant expansion to support the larger combined airline.
This combination is all about increasing our relevance and expanding JetBlue service to more customers nationwide while deepening our roots to the communities we call home. It provides us with a platform for sustainable growth with a combined order book that will accelerate our transition to new engine technology and deliver numerous operational, financial, and environmental benefits for our stakeholders. Turning now to slide 13. By expanding our service to more communities across the nation, we would immediately become an even more impactful, low-cost, high-value competitor to the big four airlines. JetBlue has won hundreds of awards since its inception from top publications and readers' choice surveys, including Best Domestic U.S. Airline, Onboard Experience, Domestic Economy Product, and Business Class Product.
Our increased scale and network relevance will magnify the JetBlue Effect, bringing our unique combination, our truly unique combination of low fares and award-winning service to more destinations. Turning now to slide 14. JetBlue's differentiated brand and culture has made it a top place to work since its first flight in 2000. The combined airline would have 32,000 crew members with plans to hire thousands more as the airline grows, including the 5,000 new crew members JetBlue has already planned to hire this year to support our NEA growth. This transaction would bring together the power of the JetBlue and Spirit teams and our shared commitment to customers and innovation, strengthening JetBlue's ability to grow, deliver outstanding service, and better compete in the market.
As a larger combined airline, current and future Spirit and JetBlue crew members would benefit from more career opportunities, broader travel benefits, more opportunities to make a difference in the communities we serve, and a deeper bench of intellectual capital to support them. We value our culture tremendously here at JetBlue. It's what makes us one of the best employers in the U.S. We know that cultural integration will be key to our success, with a great opportunity to strengthen our culture by leveraging the best practices from both companies. Turning to slide 15. Today, JetBlue is leading the industry with respect to our ESG efforts, and we have an opportunity to do even more with the combined company. We're taking bold steps to address our emissions and reduce our contribution to climate change.
Our combined fleet and order book with Spirit will be comprised of modern, fuel-efficient aircraft, which are a key part of our plan to achieve net zero carbon emissions by 2040, ten years ahead of the industry's goal. We are also excited by the opportunity to expand our important DEI efforts, including expanding our unique and highly successful JetBlue Gateway Select programs to more families, providing career paths in aviation to underrepresented groups. Now I'd like to hand it back to Ursula Hurley to close us out with some financial highlights.
Thank you, Robin. Flipping to slide 16. A combined JetBlue and Spirit would leverage our complementary Airbus fleet and order book to drive sustained profitable growth and would double the compounded annual growth rate of our fleet count between 2021 and 2027 from a 5% CAGR to a 10% CAGR. The commonality in fleet types would also simplify integration efforts. The combined airline would have a fleet of 450 aircraft with 312 Airbus aircraft to be delivered over the next six years, mitigating persistent challenges with limited aircraft manufacturer order book availability and providing increased flexibility, including levers to accelerate the retirement of older aircraft or exercise aircraft options. Turning to slide 17. We would also benefit from significant efficiency and cost savings associated with fleet simplification and modernization.
The combined company would have an all-Airbus fleet no later than 2026, and 58% or more of the combined fleet will feature new engine technology by 2028. That represents a five-fold increase in aircraft with new engine technology over the next six years, which drives double-digit improvements in fuel efficiency and carbon emissions. Now on to slide 18. The transaction economics are supported by a compelling synergy opportunity. We have preliminarily identified total annual net synergies of $600 million-$700 million or 4.5% of projected pro forma revenue. Key drivers of these net synergies are the significantly increased network relevance and the ability to accelerate our existing focus city strategy, where we can optimize the network and schedules. It also includes a revenue benefit driven by greater relevance for our fast-growing JetBlue Travel Products and our loyalty program.
On the cost front, we expect certain economies of scale offset by dyssynergies, mostly on the labor side. We look forward to completing our diligence to refine these assumptions. Given the degree of public data available and the time and effort we have already devoted to our initial analysis, we feel extremely confident in our preliminary work. Slide 19 illustrates the compelling financial rationale for the transaction and the significant opportunity to unlock shareholder value. This includes doubling our U.S. market share, doubling revenue growth from approximately mid to high single digits annually to double digits annually, boosting our profit margins by approximately two percentage points, and the transaction is 10% accretive to EPS in year one and 50% accretive in year three. Turning to slide 20.
JetBlue's relative balance sheet strength is the key enabler of this all-cash deal, including more than $9 billion of unencumbered collateral to support the transaction. Post-closing, JetBlue would maintain its strong balance sheet, including a very comfortable liquidity position and a large remaining unencumbered asset base with no significant near-term debt maturities and the vast majority of the $10.4 billion in pro forma debt maturing beyond 2026. Robin, back to you for closing comments.
Thanks, Ursula. To conclude on slide 21, I would like to reiterate that the proposed combination will position America's much-loved airline as a compelling national travel challenger to the Big Four that will benefit all of our stakeholders. Customers shouldn't have to choose between a low fare and a great experience. JetBlue offers both, and this deal allows us to expand the proven JetBlue Effect to more customers in more places and bring down more legacy fares. It accelerates JetBlue's strategic growth and complements the NEA, brings more opportunities for our crew members, brings more flights and jobs to New York, Florida, and across the country, and delivers value to the shareholders of both companies.
We are excited to work with Spirit to bring together our two great companies and teams to unleash competition in the industry, continuing to raise the bar on customer service and advance our mission to inspire humanity. Thanks for your time and interest today. With that, we are ready to take your questions.
Thanks, everyone. Myra, we're now ready for the question-and-answer session with the analysts. Please go ahead with the instructions.
Thank you. At this time, I would like to remind everyone if you wish to ask a question, please press star one on your telephone keypad. To withdraw your question, you may press the pound or hash key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Mike Linenberg from Deutsche Bank. Your line is open. Please go ahead.
Hear me? Hello?
Hey. Yeah, we can hear you, Mike. Hi, Mike.
Oh, great. Good morning. Hey, just a couple questions here. Can you give us a sense of what the spend would be to reconfigure the 173 Spirit aircraft? Can you also maybe some color about some portion of those aircraft that must come off lease, so therefore you won't have to incur reconfiguration costs. I believe, does this transaction make you the largest operator of Airbus narrow body equipment? So sort of a multipronged question, but I'm trying to get to that CapEx number.
Good morning, Mike.
Hey, Ursula.
How are you?
Doing okay. Congrats on the announcement.
Thank you. I appreciate the questions in regards to the fleet. This would make us one of the largest Airbus carriers out there. In regards to the cabin restyle, this is going to be a multiyear CapEx investment.
Mm-hmm.
The good news is we actually just completed our A320 cabin restyle program, so we know how to do it. We know how to execute it. We feel very confident in our ability to do so. As we work through diligence, we will assess, to your point, the number of aircraft that we would retrofit and over what timeframe and the level of investment that would take. More to come on financial impact, but it will be a multiyear CapEx investment.
Okay, great. Just my question to Robin. Robin, what precipitated this? Was this in response to Spirit -Frontier? Has this been in the works for some time? Were you looking to pursue this maybe late in, you know, during the pandemic? If you could give us a sense of, like, timing and thinking and what drove the process. Thank you.
Yeah. Thanks, Mike. No, great question. I mean, obviously, you know, we're always thinking about the landscape all the time. You've heard me, I think, talk for years about, you know, how we can ensure that the U.S. industry remains competitive given the you know, the concentration of power that we have in the hands of four large airlines. You know, you remember the Open Skies conversations years ago. You know, we've been thinking about that for a long time. You know, I think that, you know, obviously once the Spirit and the Frontier deal was announced, it creates a window of opportunity that, you know, if you don't act in it's gone.
Yes, it was something that, you know, the timing was definitely driven by the announcement, but the concept and the idea of sort of how do we take JetBlue and turn it into a more national brand so we can bring the JetBlue Effect and our unique offering to more customers, I mean, that's clearly something we've been thinking about for years.
Great. Thank you.
Our next question comes from the line of Jamie Baker from J.P. Morgan. Your line is open. Please go ahead.
Hey, good morning, everybody. I'm somewhat of a follow-up to Mike's question on fleet. You know, Ursula cited labor as an obvious dis-synergy. I think we all get that. But what's the density and fuel burn dis-synergy? It's unclear which A321 configuration you're gonna skew towards, but you know, just kind of round numbers, re-pitching Spirit aircraft to JetBlue configurations, you know, put something like 15, maybe even 20% upside on ex-fuel CASM. And actually, we should include fuel in CASM because ASMs per gallon go down. So what's the fleet dis-synergy that we should be thinking of on a all-in CASM basis?
Good morning, Jamie. In terms of the synergies, we provided a net number. In regards to the dissynergies associated with labor, you're correct, there's puts and takes in terms of the density. The base case assumes that the Spirit fleet is brought up to JetBlue density at this point in time. With that, in terms of the overarching CASM ex -fuel base, we don't believe there will be a material change to the unit cost base compared to JetBlue today. Given your point, the dissynergies and the puts and takes around density, we remain committed to maintain a unit cost benefit compared to the legacies. That is what JetBlue's business model is. When we combine with Spirit, that will be ever more important for us to effectively grow and grow profitably over the long term.
Okay. Just to be clear, you admit there's a labor diseconomy and a density diseconomy, but you're of the view that you can keep ex-fuel CASM consistent with its current trajectory, or did I misunderstand your-
Jamie, you also get economies of scale just naturally given the larger cost base. You do get a benefit there as well. Net-net, given the puts and takes around density and the labor dyssynergy, you also have the economies of scale that you will gain with the larger cost base. Net-net cost profile should be around where we're at today.
Okay. Second question, and then I'll get back in the queue, you know, if you're doing the call that way. Based on past precedent, we know that the Department of Justice can be appeased. Are you willing to sacrifice the NEA if asked in order to get the merger done?
Hi, Jamie, I'll take that. No, I mean, we see this as absolutely complementary to the NEA. You know, the NEA, as you know, is very focused on the three airports in the New York area and Boston, and it has created an unprecedented opportunity for JetBlue to grow. You know, this in New York this summer will be about 50% bigger in flights per day than 2019. That is only possible because of the NEA. One thing we did hear from the Department of Justice as we went through all of this was, you know, one of their concerns was just how much of our network was concentrated in the NEA markets.
That, you know, their concern that we could be quite controlled by American because of our dependency on the NEA. You know, I think we've always represented that outside of the NEA markets, we are competing furiously with American, and we see that from a number of things that we've done over the years, including adding Miami markets. This actually brings us a lot of network strength outside of the Northeast, and I think directly gets to that one of those concerns about having that level of concentration of our network in the NEA. That's why we passionately believe these deals work together.
You know, we recognize it's bold and ambitious, but we think that the opportunity to create a truly unique, more national, low-fare, high-service airline to compete with the large four is extremely important for long-term, you know, competition policy in the U.S.
Thanks, Robin. I'll get back in the queue.
Our next question comes from the line of Savanthi Syth from Raymond James. Your line is open. Please go ahead.
Hey, good morning. Just on the offer, I know there was kind of a discussion maybe that there will be a kind of a breakup fee for if the deal doesn't go through from a antitrust perspective. Any color you can provide on what that breakup fee might look like?
Good morning. We're not gonna negotiate on this call. We envision the reverse breakup fee being in the realm of precedent transactions given the size of this deal.
Okay. That's helpful. If I might, on just the cost to convert, kind of following up on Mike's question. Given your experience in doing these fleet conversions, I was kind of curious. Is this, I know each one is a little bit different, but are you able to kind of give a neighborhood of, you know, is this kind of $2 million-$3 million? Is this kind of high single-digit million? Any kind of neighborhood of what these kind of things generally cost?
Appreciate the question. There's three components of the investment that it will take. Number one, labor, parts, as well as the downtime of the aircraft. It's very unique to the specific fleet, the age of the fleet, and the time in which these aircraft actually go in for maintenance visits. You try to optimize the downtime. Really, we need more detail as we go through diligence to determine the final cost across those three investment levels.
Okay. Understood. Thank you.
Our next question comes from the line of Catherine O'Brien from Goldman Sachs. Your line is open. Please go ahead.
Hey, good morning, everyone. Thanks for the time. So a little bit of a follow-up to a question of Mike's as well. I just wondering, like, how does the tightness in the labor and aircraft market impact your decision, if at all? You know, considering that you're gonna rebrand Spirit as JetBlue, I guess just like, was this just about getting all of that headcount and aircraft in one fell swoop, or like why not do this organically? Thanks.
No, I'll take that. I mean, when I think about, you know, what are the key benefits of this transaction, you know, I really think of, you know, four different components. First of all, you know, between Spirit and JetBlue, we have a really compelling order book of very high-performing, flexible, fuel-efficient airplanes. You know, definitely, there is a significant amount of benefits that come to sort of scaling around a single fleet type. You know, and then as you know, supply of new airplanes over the next several years is very challenging in the narrow-bodied market. You know, I think it sets us up for success in that we have a very compelling order book over the next few years.
On the people side, you know, there is definitely, you know, we've all seen a sort of tightness in the labor market and a convergence of costs. You know, I hear a lot about labor disintermediation, but the reality is that given the pilot supply in the U.S., and, you know, I think that's likely to persist the next two or three years. You know, my sense is you're gonna see a lot of convergence of pay rates. In any case, a lot of the minimum wage ordinances that have gone into different airports have created convergence in many airports, labor costs as well, even sometimes between outsourced business partners and our internal crew members.
Definitely, you know, we're very excited to put the two teams together, and, you know, create a bigger team of crew members and team members who understand this industry and wanna work in it. You know, thirdly, I think the airport access to a lot of markets that are very important to JetBlue and really turbocharges our organic plan in a way that it would take us a lot longer to do otherwise. You know, by the way, we made similar arguments when we tried to acquire Virgin America, and this is a much more sort of substantive transaction than that. Fourthly, you know, when we think about what both JetBlue and Spirit do, we both primarily fly leisure customers.
I think that what we believe we can do through by really expanding and developing the product offering that we have today, whether it's our Blue Basic fare for more price-conscious customers, our more bundled Blue fare for customers who wanna buy up, overlaying our loyalty program, overlaying our travel products. I mean, our travel products program was on course for $100 million of EBIT this year. We think about how much we scale with this transaction. You know, you can start to see our ability to offer a much broader offering to leisure customers across different price points and different experiences.
You know, we think it's much more significant, and the ability to scale that and bring that to a lot more markets, I think is core to our ability to grow and scale our business. I just wanted to answer that question more broadly, as you mentioned, aircraft and people.
That's great. I really appreciate that, Robin. Maybe just one on the fleet, and this might just be that I'm reading this too closely, but the press release notes that the E190s set for retirement, but with the Northeast Alliance, the life of those owned E190s is gonna be extended. Do you just mean retirement over the coming years? I know you said like all Airbus by, I think, 2026, 2027. Or does this deal mean you could actually retire like skip the heavy checks and retire those aircraft sooner and still grow the NEA per your existing plan? Thanks so much for the time.
Appreciate the question, Katie. In regards to the E190s, as you recall, last month we converted A220 options to support the true exit of the E190. We have 60 E190s in the fleet. 30 of them are owned, and those will begin to be retired as early as next year. The remaining 30 are leases, and the last one leaves the fleet in 2026. That's the comment around being a full Airbus order book and fleet by 2026.
Got it. Thanks.
Our next question comes from the line of Duane Pfennigwerth from Evercore. Your line is open. Please go ahead.
Hey, thanks. Good morning.
Morning, Duane.
A couple questions for you, Robin. It may not be fully appreciated, but you've spent a lot of time in D.C. over the last few years. You haven't worn it on your sleeve as much as maybe some others, but it's fair to say you were very active during PSP. I wanted to ask you a different flavor of the why now question from a regulatory perspective. You know, what, if anything, has changed that would influence approval versus maybe the traditional way of thinking about transactions like this?
Yeah, no, look, it's a great question, Duane, and I, you know, look, I fully recognize and appreciate the questions we're getting on the regulatory process, you know, both with public comments that have been made on this topic more generally by the administration, but also, you know, our own experiences of going through the NEA process. I think what I would say is, obviously here it's you know, we have a moment of time and a moment of opportunity. When we look at what we think that we can do to best affect sort of positive competitive change in the U.S. and bring down fares, we truly believe that a larger JetBlue enables us to do that.
You know, when we take a Spirit, a JetBlue combination, you know, the arguments that we will be making is, first of all, it creates a larger JetBlue. It creates an opportunity for JetBlue to build more flights to more markets, to offer more competition to more people, to create more network connectivity. You know, I think, as you know, one of the reasons that we have not really been able to influence it even more than we have is in many cases, we just haven't had the amount of flights at a particular market. This turbocharges our ability to do that. I think, what's quite clear is when JetBlue flies into a legacy market, we are not ignored.
We bring prices down across the board, as we've seen recently when we entered into London. You know, ULCCs are often ignored by legacy airlines, and they don't respond to their pricing. You know, we have obviously done a lot of work on this. We didn't launch this without having done a lot of work on the regulatory side. You know, we are convinced based on our data and our analysis that we will sort of share in due course as we go through the process, that average fares come down more when JetBlue flies into a legacy market than when an ultra-low-cost carrier does.
When we take our commitment to keeping fares low, you know, commitment to offer different customers different price points from Blue Basic upwards, offering customers both a low fare and a great service, so you don't have to pick one or the other. You know, you buy a JetBlue Blue Basic fare, you're gonna get on that airplane, you're gonna have the most legroom, you're gonna have free Wi-Fi, free TV, amazing crew members, for a very compelling fare, but also the opportunity to buy up. We think we're appealing to more customers. We have a bigger effect on the market.
You know, we think all of these things point to, while we recognize it will be a pretty lengthy regulatory process, you know, we believe we have really strong arguments on our side, and those are the ones that we will be making. Because at the end of the day, while I recognize there are some who look at further airline mergers in an uneasy sense because of what's happened, the reality is that if we want to create competition against these large Big Four airlines, it's gonna require some, you know, bold audacious moves, and that's what we are outlining to you today.
Thanks. Maybe just a follow-up, Robin, and I'll stay with you, if that's all right. Any comments or thoughts about, you know, the Spirit team and how you're thinking about succession personally? Do you know, do you get, I guess, misty-eyed at all watching kinda Doug move into a chairman role? Thanks for taking the questions.
Well, I definitely was misty-eyed watching Doug go into the chairman role, because, as you know, I respected Doug immensely, and, you know, his leadership, particularly through the Payroll Support Program, I think was game-changing for our industry. You know, I wish him very well in his, I suppose, retirement, but we'll see. No, I mean, you know, on the question of the team, we're very excited. I mean, they have, Spirit have some amazing people, and, you know, we think it's a great combination.
We clearly are in a time of tightened supply, and so to have a team there that knows exactly what the industry is about, taking the best parts of, you know, the Spirit, what they do, taking the best parts of what we do, and turning into a larger JetBlue, you know, we couldn't be more excited about that. I think the other thing, you know, in the old days, you'd say, "Well, where's everyone gonna be based?" I think the reality is, in this new hybrid work model, we are all a lot more flexible.
We're gonna continue to see U.S.-based here in New York City, but we're gonna continue to, you know, have a very significant presence across multiple Florida cities, including primarily Fort Lauderdale and Orlando. In terms of my succession, then, you know, Duane, you'll be the first to know.
Well, I appreciate you taking the question. Sorry for putting you on the spot.
Thank you.
Our next question comes from the line of Dan McKenzie. Your line is open. Please go ahead.
Oh, hey, good morning, everybody. Congratulations on the work. A few questions here. Two housecleaning questions, one follow-up. First, on financing, could you speak further to that? You know, is this gonna be straight financing, or is the thought that you might wanna raise equity as well? You know, the second housecleaning question, just on synergies, so slide 18, how much of the net merger synergies are coming from upgauging Spirit's network with JetBlue's suite of premium products?
Good morning, Dan. Appreciate the questions. On the first one, what was the first question? Sorry, can you repeat your first question?
Oh, yeah, sorry.
On the financing. I'm sorry.
Yep.
On the financing. Our intent is to enter a 364-day loan to support the initial transaction. Once we receive regulatory approval, we would obviously execute a takeout, and we'll determine at that time the most optimal markets for the takeout, focusing on cost of funding. That's the initial plan in terms of financing. The second question, in regards to the net synergy numbers, the revenue assumptions assume a full conversion of the Spirit aircraft into JetBlue configuration. Those are all net in the $600 million-$700 million number that we provided.
The premium revenue is there. Okay. Then following up, Robin, you know, I hear you loud and clear on your regulatory work and how you're approaching this. You know, I'm wondering if you can share what an average Blue Basic fare is for JetBlue. You know, from what I can tell, there is a perception among some in the government that JetBlue is a high fare carrier buying a low fare airline, you know, and I hear you loud and clear attacking that this morning. That's certainly not your messaging. You know, if we're gonna compare apples for apples, you know, comparing JetBlue basic economy with Spirit's all-in, you know, what does that look like?
Look, I mean, you know, I think that's a hard thing because there's, I think, so many different routes and combinations. All I'd say is that Blue Basic fare has been designed to compete for our most price-sensitive customers, and a very significant number of our customers are buying it. I feel that it's a very compelling offering, and, you know, it's something that we're committed to keeping.
Mm-hmm. Okay. Thanks for the time, you guys.
Our next question comes from the line of Scott Group from Wolfe Research. Your line is open. Please go ahead.
Hey, thanks. Good morning.
Good morning.
Can you talk about some of the assumptions to get to EPS accretion in year one? I know Spirit and Frontier assumed negative net synergies in year one. Would you assume something similar or different? Could you also just clarify the 3x debt EBITDA, is that also in year one?
Thanks for the question, Scott. In regards to the EPS accretion in year one, that assumes that 33% of the synergies are achieved in year one. To your second question on the debt to EBITDAR.
Oh, right.
The three times is at closing of the transaction. We would assume that that would come down over time as the business actually produces meaningful EBITDAR and cash from operations. We'd be extremely focused on continuing to improve the balance sheet post-closing.
I think in terms of just on the timing of the synergies, to clarify that a little bit more, I think that, you know, we've obviously looked at sort of what's happened with previous type transactions, and given that this is a deal that's predicated on revenue synergies, you know, the ability to, I think, activate some of those quickly is there and comes more quickly than when you're dependent on cost synergies because that's sometimes some of the activities that take time.
You know, the ability to offer JetBlue Travel Products offerings to customers, loyalty offering to customers to, you know, connect websites and all those other things that you're able to do, as you start this, you know, we assume that we will take a portion of those benefits in year one.
Okay. Maybe, Robin, can you just talk about the process here? Can you engage with Spirit? Is there a set timeline for when they have to sort of decide if yours is a superior offer? Maybe just big picture, given this is the only ULCC where a deal could make sense for you.
Sorry, what's the second part? I didn't hear the second part.
Is this the only ULCC where a deal could make sense for you?
Oh, I see. In terms of the process and the timing, yeah, we've made an offer. You know, it's in the hands of the Spirit board. There's no fixed timeline as I understand it, but it's something that we expect them to give you know, a pretty active consideration to. It is a very compelling offer. It is a superior offer. We think it's good for their shareholders, good for their customers and good for their team members. You know, we will engage with them when they are ready to do so.
In terms of the ULCC, we felt that of all of the opportunities out there, this is the one that made most sense in terms of, you know, aligning with our ability to wanting to create this more national low-fare challenger. Also where sort of our network, you know, our sort of focus city strategy is today and the ability to kind of bring more network relevance to those markets more quickly because obviously that allows you to offer, you know, more flights and more choices to more customers, whether they be customers just buying purely on price or whether they be business travelers wanting an alternative to the sort of legacy competitors.
Okay. Thank you for the time.
Our next question comes from the line of James Hollins from BNP. Your line is open. Please go ahead.
Yeah. Hi. It's James Hollins, actually. Just first of all, thank you very much for the presentation. Just running through obviously the positives, and you know, obviously the benefits of the deal. I'd just be interested to know, you know, when you clearly took this to your board, I assume you've spoken to your own shareholders, whether you could maybe and perhaps honestly run us through some of the concerns that they would have had. Second to that, whether your Northeast Alliance partner, American, would raise any concerns in your expectation.
Yeah. On the second question, obviously, I don't wanna speak for American. We did speak to them last night once this had gone public. I would say that you know, I was very keen to stress to American that we are very committed to the Northeast Alliance because we truly believe that is a game-changing and disruptive for JetBlue in the Northeast. I was up in Boston yesterday announcing our new London flying and everyone's excited up there about the jobs and the additional routes and choices that the NEA is gonna enable in Boston as well. I think you know very excited about that. Then was the second question was like-
Concerns.
Look, I think it's, you know, we obviously did a lot of work on this, and I think a lot of it is some of the points that we've been getting questions on, which is really, you know, really making sure that we felt we had a regulatory path. I would say that was something that we spent a lot of work on. You know, we worked with our external advisors who are specialists in this area. You know, I think the fact that we have come forward with an offer is based on the fact that we have a conviction that we have a path to close from a regulatory point of view.
You know, our board, as you would expect them to do, did a lot of due diligence on the synergies and the financial offer and the ability for us to execute the plan. Obviously, we spent a lot of time on that and then got to a point where I think our board was convinced and unanimously authorized us to make the offer.
Thank you. Just sticking with you, Robin, on my follow-up. I mean, the problem with putting these deals ahead and sort of talking them up is if they disappear, people ask you about your strategy as an organic one. Let me ask about your strategy as an organic one if this disappears. Does it change at all in terms of how you grow and those kind of expectations? Thank you.
No, I mean, I think, you know, clearly, and it was the same argument that we made when we were trying to acquire Virgin America, and in fact the same argument I think Alaska Airlines made at the time about acquiring Virgin America. I mean, a transaction like this allows you to speed up and do something more quickly than you would otherwise do. There's definitely a benefit of time. If for some reason, you know, this does not proceed, then, you know, we feel really good about our organic plan, and then we are excited about the NEA partnership, which is turbocharging growth in the Northeast. We have a good order book, and we would continue to execute to that plan.
This is a, you know, our ability though to affect competitive change and bring, I think more low fares to more customers, is slowed down in a world where JetBlue is not growing as quickly. You know, that's why we're excited to make this offer.
Appreciate the thoughts. Thank you.
Thank you.
Our next question comes from the line of Conor Cunningham from MKM Partners. Your line is open. Please go ahead.
Hi, everyone. Thank you for the time. During the retrofit process, I mean, you're gonna removing, you know, 10% of the seats that are currently on Spirit. I get that there's some scale benefits and, you know, larger JetBlue is good for consumer pricing and all that stuff. I'm just trying to square away like how removing seats right now is pro-consumer over the long haul. I mean, again, like the deliveries going forward on Spirit's side are gonna be with less seats, so just trying to square that all away.
Yeah. Bringing, you know, the Spirit fleet to JetBlue's backyard is essentially gonna bring competitive fares with heightened and enhanced customer experience. Like, that is what JetBlue is, and we believe that we can drive that JetBlue Effect to better compete with the big four carriers in hub cities, but as well as continue to attract the leisure customer base as well, which will be double the size of what we are today. It's all about, you know, low fares, better service, and better overarching customer experience.
Yeah. I would say that when we take a step back, what we're excited about is just the size of the total fleet. Yes, you know, you're having some aircraft come off the Spirit fleet. What we're creating is this really, I think, exciting offering for all sort of customers across. First of all, we're gonna offer more flights out of more cities to give customers more choice. We'll be flying to more markets. We'll be offering different price points because while Spirit have a lot of price-sensitive customers today, there's also other people that fly Spirit. It's kind of preference because it's the most convenient direct route.
I mean, I've got plenty of friends of mine who probably shouldn't admit that on the call will fly Spirit because it's the most convenient. We also at JetBlue have very many price-sensitive customers. I think it's a bit of a misnomer sometimes to think the legacy airlines are about business travelers, you know, JetBlue's about this segment of leisure travelers, and the ultra low-cost carriers are just about people that are buying cheap fares. The reality of that is we all have a bit of everything. For us to kind of really manage that portfolio and say we have an offering here for customers who are buying purely on price that we think is actually a better offering than what they're getting today because of the experience and the fare.
We have offerings for customers that are willing to buy up or offer more, and then we have you know, a more compelling leisure, a more compelling loyalty program. We have our JetBlue Travel Products, which is really, I think, leading the industry in terms of bringing value vacations to customers. You know, when we take a step back and we look at all of that, you know, we think that is a much more compelling offering, and that we'll be able to bring that to a lot more customers.
Okay. Appreciate the detail there. Maybe following up from Jamie's earlier question, just the NEA in general. You know, I get that this is complementary in Northeast and all that stuff. Right now, I mean, you're selling American New York to Miami flights. Like, are you willing to? Like, when I think about Fort Lauderdale, like this is obviously a lot of scale there. If you include Southeast, it's less of an issue. Like, are you willing to basically wall off Florida in the Northeast Alliance? Just any thoughts around that specific market? Thank you.
Yeah. I mean, let's be very clear. We compete with American today in South Florida. You know, we fly from markets like Miami to LAX, Miami to Hartford. These markets aren't in the NEA, and we compete. Now, I think that in terms of the NEA itself, then I don't know if walling that off or limiting that in a way makes any sense to the consumer. I mean, since JetBlue has been able to add all of these flights, there's been a you know profound benefit in the form of lower fares and more choice.
We actually think that they go together, and that, you know, if we think about, again, how can JetBlue position itself here for the longer term as a true national low-fare, high-service carrier, to compete with the legacy airlines to create permanence in, you know, a more sort of disruptive, more competitive industry. We actually think these things work together. If the NEA was to be limited or unwound in any way, it would mean less JetBlue flights in the Northeast. It would mean less choice for customers, and all the things people have enjoyed about the NEA would be set backwards. You know, we're gonna be making the case very firmly, and we have a lot of conviction around the fact these two deals work together.
Okay. Appreciate it. Thank you.
Thank you.
Our next question comes from the line of Chris from Susquehanna. Your line is open. Please go ahead.
Good morning. Thanks for taking my question. Ursula, I just wanna confirm, follow-up to Jamie's earlier question that you don't expect to drive a meaningful change to your CASM ex-fuel trajectory. If we just look at what you implied here for Q1, that would put your CASM ex a hair under $0.10 here. I understand what's happening with the seat reconfiguration, but, you know, this would be a larger ASM base. Just looking at 2019, you know, combined airlines would have around 106 billion ASMs. That's 66% more than what you did in 2019.
You know, I wanna, you know, understand that, you know, in one year this doesn't expect to meaningfully change that CASMx or cost profile, and then the moving pieces behind that outside of the seat configuration elements that you identified. Thanks.
You've got three puts and takes. You have the synergies driven by labor. You obviously have the densification, and then you also have the economies of scale that you're gonna gain just through the fundamental having a larger cost base. With all of those puts and takes, based on what we know today and the analysis we've done using public data, we don't expect there to be a fundamental change in our baseline run rate unit cost production. As we go through diligence and get more detailed in-depth information on their cost structure, we will obviously provide an update to that overarching assumption. I think the main takeaway here is that we're committed to maintaining a lower cost structure versus the legacies.
That's the fundamental JetBlue business model, and that's what we're going to need to ensure that the value in this transaction comes to fruition and gets delivered as we've committed to.
Okay. The follow-up, Robin, just, you know, how much of the success of a combined JetBlue and Spirit depends on the NEA, and what happens if the NEA doesn't work out, given the DOJ's lawsuit? Thank you.
Yeah, I mean, again, they're not connected. I mean, if we were to lose the NEA litigation then, you know, which I, you know, I'm. We've, again, had a lot of conviction for when you start looking at all the benefits of what we're seeing on the NEA, and just gonna take this opportunity to repeat them here. You know, nearly a 50% increase in flights out of the New York airports. You know, more JetBlue flying to more destinations. I mean, we've announced Vancouver. We started flying to Kansas City, Milwaukee. One of our competitors did a competitive response and just added flights to Milwaukee and Kansas City. Everything we said about the NEA is turning out to be true in terms of the competitive reaction and the benefits of more low fares.
We have growth commitments at JFK because of the NEA. We agreed to some divestitures to, you know, for other airlines to access both JFK and DCA as part of the NEA. Last week, we stood in New York and announced 5,000 new jobs, largely because of the NEA. We had a big hiring event last week in the hangar at JFK, and we made nearly 1,000 job offers by the end of that day. We have got our loyalty members have access to American's network. The benefit to the NEA for consumers just is a list that keeps on giving. We're very committed to that, and that's why we believe we have such a strong argument in court.
In terms of this deal, this is really about allowing JetBlue to grow faster than we would really otherwise be able to do outside of the Northeast. Again, as I was mentioning earlier, you know, one of the concerns that has been expressed to us by Justice is just the amount of network concentration that we have in the NEA markets. This addresses that issue very clearly because it's gonna give us, it's gonna mean that the total amount of NEA network of our total network is reduced.
I understand why sort of people look at them and say, "Well, how does one work with the other from a regulatory point of view?" They actually work hand in hand, and the power actually and the greatest benefit in terms of bringing more low fares to more people is approving both of them.
Okay, if I could just squeeze in a quick one here. Did you quantify the average seats per departure, once integration is complete?
We'll provide that to you offline.
Okay. Thank you.
Our next question comes from the line of Jamie Baker from J.P. Morgan. Your line is open. Please go ahead.
You're back, Jamie.
Hey, thanks. I'll be quick. Your two-part question. In year one, does your model show them as profitable or loss producing? Second, accretion in year one, what's the timing of what you expect to accomplish in that year? You know, does that envision new labor economics, the completion of aircraft reconfiguration? Accretion in year one is a great soundbite. I'm just trying to assess how much integration will be accomplished during that first, you know, 52 weeks.
In your first question, you know, we did assume that Spirit has a profit in year one. As a reminder, we've used, you know, public data to in our model for that underlying assumption. In terms of the timing of accretion, Jamie, given the synergies are heavily revenue related, obviously you get a meaningful bump in year one, and that's why we've highlighted that 33%. Obviously, labor synergies would hit on day one, and then the cost economies of scale will obviously be embedded over the first three years.
Okay. That's helpful color. Thank you.
We have another question from the line of Savanthi Syth from Raymond James. Your line is open. Please go ahead.
Hey, thanks for the follow-up. Just a question as I think about, you know, what you gain from, you know, new access to markets and things like that. I feel like a lot of the markets you can enter fairly easily, but you know, Fort Lauderdale and Orlando are congested, and you probably have to make investments to grow there, to grow the gates and everything. So are you able to kinda talk a little bit about, you know, what this merger brings? Like the kind of type of costs or CapEx that you avoid by doing this merger versus kind of growing organically?
Yeah, I mean, I'll take that. I mean, in terms of, again, what are we getting with this? We talked earlier about the, you know, the aircraft order book and the excitement around there. We talked about, you know, access to the Spirit team, which, you know, is specifically appreciated in this tight labor market. You know, I think airport access, I mean, Savi, the way I think about it is speeding up what we would've taken years to do, and it's giving us a more instant benefit. We're not changing strategy with this. We are accelerating our strategy.
The ability to be more relevant in markets where we're competing with legacy airlines that have sort of always had historically, you know, just, more flights and so better schedules. You know, one of the benefits we've seen with the NEA in New York because we've been able to do that, is suddenly we're becoming much more relevant to business travelers, and they have another choice. I don't really see the airport piece as a huge sort of CapEx issue. It's really allowing us to grow more quickly.
By the way, you know, when we've looked at our cost structure and, you know, some of the comments we discussed around rent and landing fees and how the NEA has driven some extra CASM, you know, a lot of this growth is gonna be in airports that are sort of lower cost than some of the airports in the Northeast. You know, I think that's a, again, we look at some of the benefits of the transaction. Some of that should even out some of the escalation that we've seen in our rent and landing fees. Then also to the, you know, leisure customers. Whilst, again, people want to pigeonhole Spirit customers and say they are just there for a cheap fare, it's much more complicated than that.
I think the ability for us to, you know, they built a very loyal following over the years. They've got their Saver Club. The ability for us to, you know, offer our JetBlue product to that with different price points and different bundles, depending what their needs are, you know, we're very, very excited by that. You know, let's compare this to the last transaction. I mean, we bid it and lost it for about $2.5 billion or something like our offer, and it went for a little bit more than that. That was, you know, 50-odd airplanes and a sort of a customer base in California. I mean, this, yes, it's an extra billion, but the size of what we're acquiring in the scale is extremely extensive.
When I think about access to customers, when I think about access to more gates at more airports, more access to some of the legacy hubs that we can again bring more low fares to more people, all of those, I think, sets us up for long-term success as a, you know, really, a truly, national challenger outside of the Big Four.
That's all very helpful. Thanks, Robin. If I just might ask on the fleet side that you bring up, you do have some good growth here in the very near term. If you end up going on the organic route, is it fair to assume that you could still work with Airbus to get the aircraft to grow in that high single digit rate? Or will there be a period where you do have a slower growth because they don't have the kind of availability from a slot perspective?
Hi, Savi. To your point, we do have a meaningful order book over the next few years. Beyond 2025, we actually don't have a meaningful size order book, and we're moving to a period whereby which we're gonna start retiring our planes. Obviously a combination with Spirit would fulfill the longer term order book. That's how we're viewing this. The current standalone order book supports mid- to high-single-digit revenue growth, just to clarify. Combined with Spirit, our revenue growth would move to a low- to mid-double-digit rate.
That's helpful, sir. Thank you.
I think, Savvy, just, I mean, the other thing I just wanna, 'cause I mean, you've always sort of understood this topic so well, is that, and I was asked this question earlier. You know, we have a really strong level of conviction around our organic plan. I just think-
Mm-hmm.
To Ursula's point, you know, the challenge to accelerate that is limited right now just because of the constraints around airplanes. We're in a, you know, a tight labor supply market, particularly in areas like pilots. You know, the risk is potentially that you have to slow your organic plan because of some of those constraints. I think that, we certainly don't believe that's in our best interest. You know, this, we think, allows us to sort of turbocharge, get over that, speed bump and, you know, create something that's truly more national and again, create a leisure airline, a fundamentally based leisure airline that can just continue to offer more breadth of products and more choices to customers than just what an ultra-low-cost carrier can do today.
Fair point. Thank you.
Great. Well, thanks everyone. That's gonna conclude our Q&A with the analysts. I'll now hand it over to Emily Martin, our Director of Corporate Communications.
Thanks, Joe. We'll now take questions from members of the media. As a reminder, in the interest of time, please limit yourself to one question and one follow-up. Myra, please go ahead with the instructions.
Thank you. Once again, I would like to remind everyone, if you wish to ask a question, please press star one on your telephone keypad. To withdraw your request, you may press the pound or hash key. We'll pause for a moment to compile the Q&A roster. Once again, I would like to remind everyone, if you wish to ask a question, please press star one on your telephone keypad.
We're ready for the first question, Myra.
Thank you. Our first question comes from the line of Phil Le Beau from CNBC. Your line is open. Please go ahead.
Thank you. Robin, I know you guys said earlier you don't plan on negotiating this deal, obviously the question is going to come up, if Frontier comes back and matches your guys' offer, have you and the board discussed your willingness to sweeten your offer in the weeks ahead?
Thanks, Phil. Yeah. I mean, we haven't even heard from the board on our current offer yet, so I think we wanted to put out a very compelling offer. You know, I wouldn't frame it as a take it or leave it offer, but we wanted to kind of make sure that we put something forward that would be viewed very seriously. You know, Frontier will do what they need to do. We truly believe that this is the deal that's in the best interest of all Spirit stakeholders, whether that's shareholders, customers or their team members. You know, those are the arguments we'll be making to them, communicating to their board.
Thank you.
Our next question comes from the line of Mary Schlangenstein from. Oh, no response. Your line's open. Please go ahead.
Hi. I wanted to ask, I know this is probably hard to get a handle on time frames, but I'm wondering how you see the NEA litigation and this offer playing out. You've got the NEA trial starting, set to start in September. Do you expect that you could be completely done with that and have a ruling from the government before you would close on the Spirit offer?
Yeah, no, thanks, Mary, and good to speak to you again. You know, on the timeline, obviously the litigation of the NEA is in court set for late September. So, you know, we do believe based on what we understand today, that we will understand the resolution of that. And as I've said, that we do anticipate, you know, a fairly lengthy regulatory review process. I think we've been forthright and realistic about that. So we believe that the NEA litigation will be over before the DOJ has weighed in on this transaction. And we also believe that, you know, the merits of the NEA are gonna be based on the NEA.
You know, this transaction is not gonna be a factor in that.
Thank you.
Our next question comes from the line of Alison Sider from Wall Street Journal. Your line is open. Please go ahead.
Hi. Thanks so much. You know, just curious if we fast forward a couple years and, you know, everything's been approved, like, how would the industry look different, you know, with a combined JetBlue -Spirit than it would with a combined Spirit -Frontier? What are kind of the two outcomes, and why is the JetBlue Spirit merger the better option?
Well, you know, we believe it's a better option because I think what people love about JetBlue is our ability to combine low fares with great service, the ability to bring that to more customers. We'll still have, you know, JetBlue has a lot of very price sensitive customers too. We have a product called Blue Basic that caters to that need. But we also have customers who want to buy up to additional offerings. We also have customers who want to benefit from our loyalty program, our JetBlue Travel Products offering.
We believe that we can just bring more price points and more product offerings to the combined set of customers than we can do today. A point I've also made is that what is very clear from the fare data is that when we fly against legacy competitors and we fly into legacy hubs, we have a more profound effect on lowering market fares than when an ultra-low-cost carrier does. That is because we are not ignored. We've seen that on London, and we see that every time we add flying. We believe that one, there's a big benefit to a JetBlue combination for both JetBlue and Spirit customers.
Two, we think from a national perspective, you'll see more lower fares across more markets with a JetBlue-Spirit combination than you would with any alternative.
Thanks.
Our next question comes from the line of David Koenig. Your line is open. Please go ahead.
Good morning. Thanks for the question. I wonder what was the original plan for the timing of this announcement? Were you planning for it to go yesterday, or did it go earlier than you expected?
We were not planning for it to go yesterday. You know, there was a leak. We were obviously prepared. You know, we wouldn't be getting all these decks together sort of overnight, so we were prepared for a leak, but we weren't ready to go public yet. You know, we put our offer privately to the Spirit board. You know, it's been a challenging weekend for airlines, so we're just waiting for the dust to settle. Obviously once it leaked, you know, we wanted to make sure that we got out quickly, which we did.
Sure. Just following up in light of the challenging weekend, you know, a combined JetBlue-Spirit would have pretty heavy exposure to Florida. Would that create additional challenges recovering from just storms, weather episodes?
No, actually, you know, a more diverse, a larger airline and more diverse network actually gives you more choice in recovery. Actually, it would be very helpful.
All right. Thank you.
Our next question comes in the line of Edward Russell from Airline Weekly. Your line is open. Please go ahead.
Hi. Thank you for taking my question. One of the arguments for the Frontier-Spirit combo is that it's more of a broad national carrier, but the JetBlue Spirit map is still very heavily weighted to the East Coast. You know, what do you say to someone who argues that you know, the airline doesn't give you much breadth out west, more so than other combos?
No, I mean, you know, I've seen some of the comments on overlap. I think I'll encourage people actually to do the analysis and look how much overlap there truly is. I think that while it's true that both JetBlue and Spirit have a presence in Florida, once you get out of Florida, you know, I think this is gonna allow a much larger number of destinations to be served. You know, it's also gonna enable us to grow LAX. I mean, LAX is a market that we've wanted to grow. We've grown it. It's constrained in terms of gate capacity, and this will allow us to do that. Also grow markets out west like Las Vegas as well, which have a very strong leisure offering.
Yeah, I don't really buy that argument. I mean, at the end of the day, combined Spirit and JetBlue will fly to over 130 destinations. That's a lot more than we fly today. I think that's good news for consumers.
Okay. You say the JetBlue -Spirit combination would create a national competitor, even one with a West Coast presence?
Oh, absolutely. I mean, I think, you know, we're very much, you know, we see this as a way to create a truly national challenger to offer low fares and great service to compete with the large four legacy airlines.
Thank you.
Our next question comes from the line of Dawn Gilbertson from USA Today. Your line is open. Please go ahead.
Hi. Good morning. A couple questions. What percentage of JetBlue's customers currently buy Blue Basic? Robin, you mentioned that it's very popular. Secondly, you know, Frontier, you know, came out yesterday and said you guys aren't a low-fare airline. Can you address that question? You know, if you're a Spirit customer out there and you're used to looking at a $49 fare, not buying any of the extras, what's in it for them? Thank you.
No, I appreciate the question. In terms of numbers of customers that buy Blue Basic, that's not something we are disclosing at this point, but I will tell you it's very significant. In terms of the second question, you know, I think that for a Spirit customer, there's a lot in it for them. I mean, first of all, our Blue Basic fare offering is a very compelling offering for a customer that wants to buy on price. When they step on a JetBlue airplane, they're gonna see a lot more legroom. They're gonna have free Wi-Fi, they're gonna have free TV and free drinks and snacks. I think to have a really low fare and all of those additional parts of the offering, I think is something that most people will welcome.
I can tell you since we announced this yesterday, I think there's a lot of excitement in markets like Fort Lauderdale for sort of a bigger JetBlue. You know, in addition, for customers who want something other than just the Blue Basic fare, the ability at a very affordable buy-up to buy up to our Blue fare and get other benefits, to sign up to our meaningful loyalty program, that also is gonna bring access to other airlines in terms of earning and burning points, the ability to buy a vacation, a hotel, a car through our JetBlue Travel Products and all the unique benefits that they offer. I mean, there is a lot more there for those customers than I think a combined ultra-low-cost carrier combination can offer.
Thank you.
There are no more phone questions. Emily, you may continue.
That will conclude today's conference call. Thank you for joining us and have a great day.