Moves clear way for Frontier’s $2.9B offer
Though JetBlue made an offer for more money, Spirit Airlines seems poised to forge ahead with a merger with Frontier. Spirit’s board unanimously rejected JetBlue’s $3.6 billion buyout offer as “not superior” to Frontier’s $2.9 billion cash and stock offer, citing the likelihood that federal regulators would block JetBlue’s purchase.
“We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue’s Northeast Alliance (NEA) with American Airlines remains in existence,” Spirit chairman Mac Gardner and CEO Ted Christie wrote. “As you know, Spirit and many other airline and air travel constituencies have publicly opposed the NEA on grounds that it is anticompetitive. We struggle to understand how JetBlue can believe (Department of Justice), or a court, will be persuaded that JetBlue should be allowed to form an anticompetitive alliance that aligns its interests with a legacy carrier and then undertake an acquisition that will eliminate the largest (ultra low-cost) carrier.”
JetBlue was bidding to add international routes to its portfolio with a purchase of Spirit that could allow it to challenge the supremacy of American, Delta, United, and Southwest, which carry more than 80% of air travelers from the U.S.
When JetBlue made the offer in April, Spirit’s board said that it could reasonably turn out to be the better of the offers, but the directors are now unanimous in pushing forward with the Frontier deal. Under its terms, Frontier shareholders would get 51.5% of the stock in the new airline and Frontier would control seven seats on a newly formed board of 12 directors.
JetBlue CEO Robin Hayes said the airline had added financial protections to its bid in case federal regulators or courts rejected it, but those protections were apparently not enough to convince the Spirit directors to accept.