The outlook for JetBlue could get murky if the airline ends up buying rival Spirit Airlines , according to Raymond James. Analyst Savanthi Syth on Wednesday downgraded JetBlue to market perform from outperform, a day after the airline made an all-cash offer to buy Spirit for $3.6 billion . Spirit had agreed in February to merge with Frontier Airlines in a $6.6 billion deal. "While there may be longer term merits to the deal, execution risk is greater than that of the proposed Spirit-Frontier merger with dis-synergies likely to precede any meaningful synergy benefit," Syth wrote. "We admit, we did not see this coming." An all-cash buyout of Spirit would hurt JetBlue in the near to medium term, according to the note. Analysts say that a JetBlue-Spirit merger is acquisition to execute than the proposed Frontier-Spirit merger, because of greater labor costs and investments to changing cabin layouts. Of the three airlines, JetBlue is the only one with a unionized labor force, according to the note. Raymond James has a price target of $18.50 on JetBlue, which is about 35.6% above where shares closed on Tuesday. Shares for JetBlue and Spirit slipped 2.3% in Wednesday premarket trading. Shares for Frontier Group Holdings fell 3.9%. —CNBC's Michael Bloom contributed to this report.
JetBlue Airways aircrafts are pictured at departure gates at John F. Kennedy International Airport in New York.
Fred Prouser | Reuters
The outlook for JetBlue could get murky if the airline ends up buying rival Spirit Airlines, according to Raymond James.