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Wednesday, September 28, 2022

Spirit Airlines will evaluate JetBlue’s buyout bid in light of its proposed merger with Frontier, according to sources

Earlier this week, Spirit Airlines said that it will begin discussions with JetBlue Airways regarding a possible merger of the two firms, a move that might jeopardise the airline’s planned merger with Frontier Airlines.

Spirit said in a statement that it had checked with independent financial and legal consultants and found that JetBlue’s offer might “reasonably” outperform the cash-and-stock merger agreement between the two firms announced in February. JetBlue’s unexpected proposal, disclosed this week, outbid Frontier’s first offer by a significant margin.

The airline stated in a statement that it wants to “engage in negotiations with JetBlue about JetBlue’s proposal” in accordance with the provisions of the company’s merger agreement with Frontier. JetBlue has not responded to a request for comment.

Spirit said on Thursday that its board of directors did not consider JetBlue’s bid to be superior to the Frontier merger and that the board’s previous recommendation to shareholders to approve the merger remains in effect.

Some experts were taken aback by JetBlue’s Tuesday bid, which totaled around $3.6 billion in cash. They questioned the airline’s estimates about how easily it would be able to acquire Spirit Airlines. With Frontier’s stock price fluctuating, the value of Frontier’s offer has changed as well, although it was worth approximately a third less than the JetBlue proposal based on Monday’s share pricing.

Together with Spirit, JetBlue and Frontier claim that they will be better positioned to compete with America’s four main airlines, which control almost two-thirds of the domestic market.

The Frontier merger is typically seen as more easy by experts, since it brings together two budget airlines with complementary characteristics on opposing coasts. The JetBlue acquisition of Spirit Airlines is less clear-cut, while some experts believe it makes sense for the airline to acquire Spirit in order to speed expansion plans that would be difficult to implement otherwise.

David Faber
I am a Business Journalist of The National Era
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