IB Net Payout Yields Model

Spirit Airlines: Wait For The Payout

  •  Spirit Airlines has at least 44% upside on closing the JetBlue deal.
  • The airline deal still has a lot of questions on whether regulators will approve the merger.
  • The stock is cheap whether the deal closes at $33.50 per share in cash or the airline and shareholders get a large breakup fee and Spirit remains a standalone airline.
  • This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More » 

While long term investors should've wanted the Frontier Group Holdings' (ULCC) buyout of Spirit Airlines (NYSE:SAVE), those investors must now analyze the JetBlue Airways (JBLU) deal. The agreed upon purchase price provides substantial upside to the stock while holding Spirit Airlines offers downside protection on a deal failure. My investment thesis remains ultra Bullish on the stock, though disappointed shareholders didn't approve the merger with Frontier.

Read the full article on Seeking Alpha. 

Disclosure: Long SAVE. Please review the disclaimer page for more details. 

Update - Sept. 15

Not convinced ending an alliance will solve the regulatory issues with the $JBLU merger. Spirit isn't even up on this news. 

-JetBlue (NASDAQ:JBLU) is reportedly not as committed to retaining the Northeast Alliance with American Airlines (NASDAQ:AAL) as the JBLU CEO has said in recent months in his battle to acquire Spirit Airlines (NYSE:SAVE), according to a Dealreporter item.

-The update comes as the publication reported in the same article on Thursday that JetBlue's (JBLU) planned purchase of Spirit (SAVE) has received a second request from the DOJ, according to sources familiar.

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