This combination will create the nation’s fifth-largest airline.
According to the definitive merger agreement, JetBlue will acquire Spirit by paying $33.50 a share in cash.
This includes a $2.50 per share prepayment once Spirit stockholders clear the deal.
JetBlue also agreed to pay a monthly ticking fee of $0.10 from January next year until deal completion.
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JetBlue CEO Robin Hayes said: “We are excited to deliver this compelling combination that turbocharges our strategic growth, enabling JetBlue to bring our unique blend of low fares and exceptional service to more customers on more routes.
“We look forward to welcoming Spirit’s outstanding team members to JetBlue and together creating a customer-centric, fifth-largest carrier in the United States. Spirit and JetBlue will continue to advance our shared goal of disrupting the industry to bring down fares from the Big Four airlines.
“This combination is an exciting opportunity to diversify and expand our network, add jobs and new possibilities for Crewmembers, and expand our platform for profitable growth.”
JetBlue believes that the consolidation would expedite its growth plan with more than 1,700 daily flights operating to more than 125 destinations across 30 countries.
It also expects the transaction to significantly add to its earnings per share in the first full year after closing.
The deal also awaits regulatory approval, with completion anticipated by the first half of 2024.
Until the deal is closed, the two companies will operate as independent business entities.
The merged group will be based in New York, having a combined fleet of 458 aircraft and an order book of over 300 Airbus aircraft.
Headed by Hayes, the combined entity will serve 77 million customers.
The companies’ boards of directors have approved the transaction.
JetBlue added that it had scrapped its previously announced all-cash tender offer to buy Spirit common stock.
Spirit president and CEO Ted Christie said: “We are thrilled to unite with JetBlue through our improved agreement to create the most compelling national low-fare challenger to the dominant US carriers and we look forward to working with JetBlue to complete the transaction.
“Bringing our two airlines together will be a game-changer, and we are confident that JetBlue will deliver opportunities for our guests and team members with JetBlue’s unique blend of low fares and award-winning service.”
For this transaction, Goldman Sachs & Co offered financial advice to JetBlue while Shearman & Sterling was its legal adviser.