JetBlue Airways Corporation and Deutsche Lufthansa AG have announced an agreement for Lufthansa to make a minority equity investment in JetBlue.This transaction represents the first significant investment by a European air carrier in a U.S. point-to-point air carrier.
Under the terms of the agreement, which has been approved by the Boards of both companies, Lufthansa will purchase in a private placement approximately 42 million newly issued common shares of JetBlue, or 19% of JetBlue’s equity after giving effect to the issuance. Lufthansa is acquiring the shares at a price of $7.27 per share, or a total of approximately $300 million, representing a 16% premium to yesterday’s closing price of $6.25.
The agreement provides that a Lufthansa nominee will be appointed to the Board of Directors upon the closing of the transaction. The Lufthansa nominee will be a Class II director and will be up for election at JetBlue’s annual meeting in 2008.
“We are very pleased to become an investor in JetBlue,” said Lufthansa Group Chairman and Chief Executive Officer Wolfgang Mayrhuber. “Our investment reflects the confidence we have in JetBlue«s quality, growth potential and management team. This investment presents Lufthansa with a compelling opportunity to invest in the U.S. point-to-point carrier market as the industry continues to evolve. The transaction links two airlines with international reputations for quality, innovation and a service culture.”
“We welcome this significant endorsement of JetBlue’s franchise from one of the most respected leaders in global aviation,” said Dave Barger, JetBlue’s CEO. “The agreement reaffirms our belief in JetBlue’s disciplined growth plan and will also improve our balance sheet and give us greater financial flexibility as we move into 2008.”
Both airlines also look forward to exploring potential opportunities for further cooperation for the benefit of their customers. No specific areas of potential cooperation have been agreed.
JetBlue shareholder approval is not required in connection with the transaction, which is subject to regulatory review and approval, and is expected to close in the first quarter of 2008.