Wall Street was rocked yesterday by jetBlue Airways’ (B6) unsolicited bid to buy Spirit Airlines (NK) which has already agreed to merge with Frontier Airlines. JetBlue is based in New York and Spirit is based in Broward County, though the State of Florida has twice failed in its efforts to have JetBlue relocate its HQ to the Sunshine State. I am told by a source that relocation to Florida, even if jetBlue were to succeed in purchasing Florida-based Spirit is now “off the table, probably permanently.”

But the big question is why would jetBlue, an airline known for its service levels and amenities want to buy, Spirit, an ultra-low cost carrier (ULCC) whose pricing and business model is completely different?

In a letter to jetBlue employees, sent yesterday, management indicated the opportunity to grow at three key airports – Fort Lauderdale, Orlando and Los Angeles, where Spirit currently is larger than jetBlue (well at LAX, about the same size, but despite having focus cities at the two Florida destinations mentioned, jetBlue is significantly smaller than Spirit currently at both).

So basically, Florida is at the heart of this proposal.

JetBlue’s two largest bases are New York-JFK and Boston. Both are congested airports that rely largely on business traffic. New York-JFK is a slot controlled airport and while Boston isn’t technically slot-controlled, it effectively is, as MassPort who administers Logan International has hard time keeping up with demand for gates and terminal space.

In spite of everything that has happened the last two years, and jetBlue’s own precarious finances, the airline has held its own in the Northeast and with business travel bound to rebound, in addition to the Northeast Alliance with American, B6 appears well-positioned there.

However, jetBlue’s own position in Florida has slipped. Pre-pandemic, jetBlue was the largest carrier in Fort Lauderdale (which was growing at a rate to rival it’s Boston and NYC bases), but now is a distant second as Spirt’s ULCC model feasted on discount travelers seeking Sunshine State vacations during the pandemic and jetBlue’s growth efforts in Florida basically flopped. Similarly, in Orlando, jetBlue has gone from competing for second in market share to being outside the top five at that airport. So winning back fare-conscious Florida travelers is critical to complimenting jetBlue’s strong position in the Northeast.

But still why would jetBlue, which has a unique corporate culture, and a reputation to protect want to jump in bed with Spirit? Spirit’s reputation for service is poor, but it’s improved of late and the biggest factor is that the airlines share a common fleet type (A320 family) which are both powered by similar engines. JetBlue is eliminating its non-Airbus fleet types and taking on the A220 family for shorter hops and long-thin routes.

JetBlue is very good at keeping its costs in check, and perhaps that’s probably the primary reason they survived the pandemic. Bringing on-board a ULCC that they could merge into jetBlue, so expand, reaching critical mass in key markets, particularly here in Florida, without costs spiraling out of control is tempting.

Their is also the very real possibility to alliance with American will get scuttled or withered down due to the Biden DOJ’s lawsuit (which Florida has signed on to, the only state with a GOP Attorney General to do so) against the alliance. While we can question whether a jetBlue-Spirit merger would pass antitrust scrutiny, it might have a better shot than either the proposed Frontier-Spirit merger or a court’s view of the jetBlue-American alliance. And it would yield a more robust competitor in both Florida and Los Angeles.

It’s hard to know what Spirit board and shareholders will do since this offer might prove more financially lucrative for them then the Frontier merger. We will keep on top of developments with this story.