JetBlue will acquire Spirit, creating the fifth-largest airline in the US

Photo by Joe Raedle / Getty Images

A previous deal between the two airlines fell apart on Wednesday. The fifth-largest airline in the US will be the result of the merger.

The deal was rejected by Spirit's shareholders. The two airlines are trying to create a budget airline that will bring down airline ticket prices.

It has been a difficult road to today's announcement. Frontier announced in February that it was going to buy Spirit in a stock and cash deal. In April, the airline presented an all-cash offer of $3.6 billion for the company. In the event that antitrust issues prevented the deal from going through, the airline offered to pay $200 million in a break up.

The deal was rejected by Spirit due to its main concern being the alliance with American Airlines. antitrust issues and an unacceptable level of closing risk were cited by the board as reasons for rejecting the JetBlue bid. The airline lowered its bid to $30 per share, but still said it would be open to a $33-a-share transaction.

Facing down a hostile takeover, Spirit dropped out of talks with Frontier. The boards of directors of both companies approved the new merger agreement, which values the combined airline at an enterprise value of over $7 billion.

The goal of the two airlines is to bring down fares from the Big Four airlines.

In light of antitrust concerns, Spirit Airlines has to sell to shareholders a deal that it previously opposed. Ted Christie said on CNBC that a lot has been said over the last few months. The people at JetBlue have a lot of good thoughts on their plans for that.

The deal needs to be approved by shareholders. Customer complaints skyrocketed and prompted concerns from Washington during the summer when flights were delayed and canceled.