BREAKING: Spirit Airlines Rejects JetBlue Bid In Favor Of Frontier Merger

Skift Take

Spirit has spoken. Frontier is its preferred partner. But JetBlue isn’t done yet.

Edward Russell

Spirit Airlines said Monday it will continue to pursue a $2.9 billion merger with Frontier Airlines, turning down the surprise bid from JetBlue Airways because it largely believes the risk to complete that deal was too high.

JetBlue made a $3.6 billion counter-offer on April 5 for Spirit that raised eyebrows in in some aviation circles.

“Spirit continues to believe in the strategic rationale of the proposed merger with Frontier and is confident that it represents the best opportunity to maximize long-term shareholder value,” said Mac Gardner, chairman of board of directors for Spirit in a statement. “The board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders.”

But JetBlue is not out. In a separate statement Monday, the New York-based airline committed to divesting all of Spirit’s assets in Boston and New York as well as some gates in Fort Lauderdale — a base for both JetBlue and Spirit — in order to pass regulatory muster. It also offered an increased break-up fee of $200 million. However, ending JetBlue’s controversial alliance with American Airlines in the northeast remained off the table as a competitive remedy for the proposed merger.

The financial terms of JetBlue’s offer of $33 per share for Spirit, which beats Frontier’s offer of an implied value pf $25.83 per share, are unchanged.

“By creating a national competitor to the Big 4 airlines, this transaction would deliver meaningful benefits for customers, [and] superior value for shareholders of both airlines,” JetBlue CEO Robin Hayes said in a statement. “We have confidence that we can complete this transaction to bring more low fares and great service to more customers.”

American, Delta Air Lines, Southwest Airlines, and United Airlines make up the U.S. Big 4. They carried nearly 80 percent of all U.S. domestic travelers in 2021, U.S. Bureau of Transport Statistics (BTS) data via Cirium show.

Wall Street analysts argue that Frontier could emerge the winner in the bidding war for Spirit. Either the Denver-based budget airline gets Spirit — as the takeover targets board has affirmed — or it emerges as the only large deeply-discount fare airline in the U.S., which would also be an enviable position in the market.

A JetBlue-Spirit merger would create an airline with a more than 8 percent share of U.S. flyers, while a Frontier-Spirit merger would create one with a just under 8 percent share based on 2021 numbers, according to BTS data.

Frontier was not immediately available for comment.

BREAKING: This story is breaking. Check back for updates.

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