S&P flips JetBlue view to negative

S&P said it revised its outlook for JetBlue Airways Corp. to negative from positive but affirmed its B+ rating.

On Thursday, JetBlue announced its agreed to buy Spirit Airlines Inc. for $33.50 per share in cash. The deal is subject to Department of Justice approval.

“We expect the transaction to benefit JetBlue's competitive market position but weaken its profitability metrics,” the agency said in press release.

“JetBlue's integration strategy involves realigning Spirit's entire operations to the JetBlue operating model. We believe this exposes the company to significant risks associated with high integration expenses, delays in realization of revenue synergies, as well as labor dis-synergies,” S&P said.

The negative outlook reflects the possibility of a lower rating on JetBlue if its funds from operations to debt to remain under 12% due to higher debt levels, significant transaction-related expenses, or weaker operating performance.

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