Major US low cost carrier JetBlue has reached a $3.8 billion deal to buy Spirit Airlines, a merger that could create the nation’s fifth largest airline, with a combined share of more than 10 per cent of the market by mid-2025.

“We believe we can uniquely be a solution to the lack of competition in the US airline industry and the continued dominance of the big four,” said Robin Hayes, JetBlue’s chief executive. “By enabling JetBlue to grow faster, we can go head-to-head with the legacies in more places to lower fares and improve service for everyone.”

The merger will challenge the dominance of United Airlines, which has around a 14 per cent share. Delta Air Lines and Southwest Airlines control more than 17 per cent each, while American Airlines, holds more than 18 per cent of the market.

The news comes only months after Frontier Airlines and Spirit revealed merger plans which were called off earlier this week, after Spirit shareholders failed to back the offer.

The merger partners said they expected to seek approval for the deal from Spirit’s shareholders this autumn and from regulators by early 2024. The airlines said they expected to close the transaction no later than the first half of 2024, with plans to begin operating as a single carrier by the first half of 2025.

The merger deal will however still have to overcome acute antitrust scrutiny by US regulators who will be examining if competition is reduced.

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