WHEN: Today, Thursday, July 28, 2022
WHERE: CNBC's "Squawk Box"
Following is the unofficial transcript of a CNBC exclusive interview with JetBlue CEO Robin Hayes and Spirit Airlines CEO Ted Christie on CNBC's "Squawk Box" (M-F, 6AM – 9AM ET) today, Thursday, July 28th. Following is a link to video on CNBC.com: https://www.cnbc.com/video/2022/07/28/jetblue-agrees-to-buy-spirit-airlines-in-3-point-8-billion-deal.html.
All references must be sourced to CNBC.
PHIL LEBEAU: Thank you Andrew. Let's bring in Robin Hayes, the CEO of JetBlue, along with Ted Christie, CEO of Spirit joining us this morning just hours after you guys, you know, look, we knew this was likely going to happen. You announced it within the last hour. What's changed? This deal is largely what you guys had talked about or considered for the last several weeks. Why, why the agreement now?
TED CHRISTIE: Good morning Phil. Thanks for having us on. Exciting day today to talk about our merger agreement with JetBlue. It's going to create a very powerful national competitor. We also have a lot of value for our shareholders and it's going to be a great thing for the Spirit team so pretty exciting day. A lot has transpired, a lot of twists and turns over the last couple of months but we're excited where we landed today.
LEBEAU: Robin, what was the biggest twist and turn in the last two weeks let's say that made this come together?
ROBIN HAYES: Hi Phil, great to see you. Look, I think the financial terms of our deal had been the same for a while. I think what was very important to the Spirit team was making sure that they had the ability in the next year or two as we go through regulatory approval to run their business successfully. We're still going to compete in the meantime. It's important that we compete in the meantime. And so really, I wouldn't describe it as twists and turns I was, I describe it really just working through some of the details that Spirit would need to allow them to continue to run a successful business in the interim.
LEBEAU: Ted, let me put you on the spot here. We've interviewed you many times and I'm looking at three that my producer Meghan Reeder has pulled up over the last two months where you point blank say any merger with JetBlue, it ain't gonna happen. Regulators are gonna shut it down. Why do you think it still is possible? Why go through with this if the regulators are likely to shoot it down?
CHRISTIE: Well, a lot's been said over the last few months, obviously always with our stakeholders in mind and we've we've been listening to the folks at JetBlue and they have they have a lot of good thoughts on on on their plans for that and we've been learning as well so, you know, I'm actually going to let Robin, you know, jump in as well to give give some views on on their approach from a regulatory perspective.
HAYES: Yeah, thanks, Phil. No one has been more passionate about competition in the US than than me. I've been making speeches about it for years so we've always known that this transaction, just as the Spirit Frontier transaction, would face a significant significant amount of regulatory scrutiny. But when we look at what the issue is in the US, the issue is that for large airlines have about 80% of the market, and then you have a number of much smaller airlines. So the best thing that we can do to create a more vibrant, a more competitive industry is to really empower this like new larger JetBlue that can bring low fares and great service together and make sure that the industry becomes more competitive because we can bring our products and our low fares to more destinations than if we were just growing alone.
ANDREW ROSS SORKIN: Andrew here. I have to admit I'm surprised, a bit confused and just to go back to something you said there were the words had been said, lots of words have been said. You've called JetBlue cynical, you've called them childish. Just, were those negotiating tactics? Were those genuine feelings? How do you make the distinction today?
CHRISTIE: Yeah, that's right. I mean, look, there's like I said, we always had our stakeholders in mind over the last number of months, and we had a merger agreement. We were actively soliciting on behalf of that merger agreement. But now we are where we are today. We have a very exciting transaction on behalf of our shareholders and our team members. It's going to deliver a lot of value. We're going to create a big national competitor and so a lot of reasons to be excited about where we've landed and looking forward.
SORKIN: But does that mean that everything you said before isn't isn't true? I mean was the proposal cynical there? Have they behaved childishly? Do you believe that the competition issues that you raised—
CHRISTIE: We're looking here to—
SORKIN: Are still the case?
CHRISTIE: Sorry, I cut out but they it's obviously not. They've been very forthright in moving ahead here. We've created a very exciting transaction for our group. A lot to be excited about. As I said, you know, we were we were defending our deal and and interested in the benefit or excuse me in the interests of our stakeholders then and now we're doing the exact same thing. Ready to press ahead, get this deal done and and create a lot of value.
LEBEAU: But Ted, not to belabor this but what Andrew and I think a lot of people are wondering about and I'm wondering about is look, you talked with us on June 28th, your exact words about JetBlue were, their strategy would be to remove seats from our airplanes, which is a capacity constraint, which is kind of a no no. Is that going to happen? Are they going to remove seats from your airplanes? And what's going to happen with capacity? I think, look, the question we're getting at is are the fundamentals different in this agreement now than what we've heard about in the past?
CHRISTIE: Well, there have been, like I said, we've we've learned a lot over the last few months and they've made improvements in making sure that our team is going to be in a good position, that our shareholders are going to deliver a lot of value. Robin's at best to, you know, describe what JetBlue's strategy will be going forward. But I think, you know, they've got a an aggressive strategy to get this deal done. We're going to be right by their side, making sure it happens because it's good for our group and and excited about that. I mean, this is some of the narrative is that this is going to create a big national competitor to the big four. It still is a very top heavy industry and this is our chance to contribute to that.
HAYES: No, look Phil, I mean we're we're looking ahead. Both JetBlue and Spirit were doing what they felt was in the best interests at the time for their company. That's what we both should have been doing but we've reached a consensual agreement. We're both incredibly excited about it. And, you know, we're we're focused on getting this deal done. We're focused on bringing, you know, bringing more airplanes in, growing, offering more low fares and great product to customers in more geographies than JetBlue or Spirit could could do alone, and really creating what I think could be one of the biggest things in the last decade or so in helping the industry in the US remain competitive and that is the important part for that. It's not about low fares or great service. It's about both, and this is what the new JetBlue will bring and we're extremely excited to work with all the Spirit team members on making that happen.
LEBEAU: Quickly, Robin, will you be divesting some of the routes that you have indicated you'd be willing to give up in order to get this across the finish line with regulators?
HAYES: Yeah, of course. I mean, we've laid out as you know Phil, unprecedented divestiture commitments so early in the process. You've covered airline mergers for a long time, you know what we offered really was unique and the regulatory review process is already underway and we're gonna engage on on that, and that includes commitments to some of the divestitures we've already made.
LEBEAU: Robin Hayes, the CEO of JetBlue, who by the way will be leading the airline if this combination is approved by regulators, along with Ted Christie, the CEO of Spirit who will be with the company at least through 2023 and the end of 2024 as they work through this process to create the fifth largest airline in the United States. Robin, Ted, thank you very much. I'm sure we'll be talking more as you work your way through this process.